With cryptocurrency becoming more mainstream, more people are joining the trend to own digital currencies. Everyone from major financial institutions to millennials want to know more about this incredible technology. Also, they want to know how to make money from using cryptocurrency.
If you are one of those people, there is so much you need to know before you start to trade. First, you need to find the best trading platform for your needs.
This guide will highlight the tips you should follow to find a good cryptocurrency trading platform.
Do Your Research
Before starting to trade, you need to do your own research. It will involve comparing all the popular cryptocurrency trading platforms side by side to find their weak points as well as their strong points.
This step is very important because you need to know if the platform is open to users from your region. It is ideal to choose a platform that has no restrictions for users in other regions.
Also, you need to determine if the platform is secure and legitimate. A good example of poor security was the Mt. Gox exchange which collapsed and lots of users lost money. There is also the hacking of Coincheck. You need to ensure that the exchange has a good security protocol.
Compare the Platform Features
Comparing the features of the platform will help you prepare for trading. One example is the method of buying cryptocurrency. Some platforms allow you to deposit directly from your bank while others use PayPal. You can also use debit and credit cards, but some only allow cryptocurrency for purchases.
As a newbie, you may not have cryptocurrency before entering the platform. It is ideal to look for an exchange that accepts fiat so you can trade with ease. Also, check how long the transactions take to be processed. Some exchanges take days while others are instant.
Check other crucial factors like process of regulation, fees, assets, trading tools, user experience, and liquidity. Be sure to consider every single detail before starting to determine if the platform is right for you.
Does it Offer P2P Exchange or Broker?
It is important to note that there are different kinds of crypto exchanges. You should be able to identify them before choosing a platform to trade on. The most common ones are platforms such as Coinbase and Binance. These marketplaces allow users to place sell or buy orders and charge a fee for all transactions.
On the other hand, P2P exchanges connect sellers and buyers directly. This feature helps reduce network congestion while maintaining a trustless, secure system for crypto exchange. Binance also offers this option.
What Tokens Does it Support?
Many cryptocurrency exchanges support Ethereum and Bitcoin. However, these coins are not the only ones many people want to trade with. Some exchanges list a lot of altcoins while others focus on the major cryptocurrencies.
Also, you need to consider an exchange that has a stable coin option. Stable coins can help you to hedge against volatility in the crypto market. Some popular ones include USDT, USD Coin, and TrueUSD.
You should consider the fee structure as it differs across platforms. Some larger platforms offer discounted fees especially when it has its own token that is used to finish transactions. The number of tokens the platform holds should also matter. Some platforms also charge transaction fees on sales.
Before choosing a crypto platform to trade on, you should consider all the factors listed above such as platform features, P2P, and tokens available. Each platform is different with varying security precautions, so you need to consider that too.
Also, try to compare all options available to you. In some cases, you may need to actually try out the exchanges for yourself before settling for one.