How to choose the right crypto exchange for trading
Choosing the right cryptocurrency exchange is of great essence to any crypto trader or investor. When looking for a crypto exchange, a number of factors should be carefully considered: we discuss the most important factors below:
1. Fees charged by the crypto exchange
Crypto exchanges always charge a fee for every trade. It is crucial to have a closer look at the fees that are charged by the crypto exchanges before committing to one. Since the fees and method of charging are determined internally, they usually differ from one platform to another. In most cases, however, exchanges charge a percentage of every trade.
Also, there are withdrawal fees and limits that using a platform for trading attracts, so traders should take these into account before committing to sign up with the crypto exchanges.
2. The reputation of the crypto exchange
The reputation of a crypto exchange is also an important factor that should be taken into consideration. In the recent past, there have been crypto exchanges that were hacked or that engaged in exit scams, thus resulting in losses for the users. It is, therefore, advised that the reputation of the crypto exchange should be factored in before making the decision to use them.
3. Security of the platform
Hundreds of billions of US dollars are always traded in crypto exchanges. This makes them a target for cybercriminals. During the first half of 2018, there were at least four successful attacks, which culminated in a loss of more than $750 million. Thus, before deciding to use any crypto exchange, carefully evaluate how to secure the crypto exchange of interest is.
Crypto exchanges make it a priority to ensure that they have put in place various measures to secure the assets of their users. Some include remediation, data collection, cold storage, asset reserves, as well as custodial storage services.
As their reputation rests largely on the safety of their platform, some exchanges work with highly experienced cyber-intrusion detection analysts and investigators and perform in-depth intelligence as well as forensics activities with the aim of ensuring effective resolution of any kind of security incident.
All these measures are meant to protect their users from any form of security breach or fraudulent activities. There are usually updates from exchanges informing users of safety and security protocols on their platforms; new users should watch out for these. Two-factor authentication (2FA) is an extra layer of security that prospective traders should take advantage of on any platform they choose.
There are crypto exchanges that limit the number of people who can trade at any point in time. There are also crypto exchanges that limit the assets being traded. New traders should take these into consideration while seeking a crypto exchange to trade on.
5. Crypto Prices
Since cryptos are decentralised currencies, their prices differ from one exchange to the other. This could be brought about by a difference in location and volume, among other factors. Users should check the prices and ensure that they are okay with it before choosing a crypto exchange.
6. Coin selection
Most traders always look at the asset selection of the crypto exchanges. The top digital coins like Bitcoin, Ethereum as well as Litecoin are extensively available on a number of crypto exchanges. However, the other smaller cap coins might not be available on some of the exchanges. As a result, it is important to know the kinds of coins that a crypto exchange offers.
Finally, traders always check various aspects of the Know Your Customer (KYC) process of the crypto exchanges. A number of traders like it when it is very easy for them to upload their KYCs. They also prefer quicker approval processes. Usually, as long as the client submits all the necessary documents that are requested, the approval process should be fast but to be safe, users can also read reviews by existing users about how well an exchange is performing.
As you are about to start investing in crypto, you should take caution like you would when starting any new endeavour. From a proper introduction to the crypto world to opening an account on a crypto exchange platform to making sure your funds are safe, every step matters and should be carefully considered.