Tips When Choosing Crypto Trading Platforms

crypto trading

If you are an investor interested in trading crypto, then the first question on your mind is likely where do I start? Well, the first step will be to find a crypto trading platform that is suitable for you. Choosing the wrong platform will lead to wasted effort, money and time.

But how do you choose the right crypto trading platform? You start by understanding your goals. For instance, do you want to take long term trades or do you want to trade short term?

Secondly, you may also want to consider spot exchanges where you can buy and sell actual digital assets such as spot bitcoin. Alternatively, an investor may want to check out derivatives. Here a trader can buy or sell options and futures derived from the prices of crypto assets.

Once you have thoroughly considered your goals, you will also need to take a look at the regulations as well as exchange security.

Let’s take a look at more tips to consider as you compare crypto trading platforms.

1. The reputation

It is crucial that you consider the reputation of a crypto trading platform before you decide to invest. After all, this type of trading and investing is still relatively new and there are people that have been scammed for their hard-earned money before.

One way of checking the reputation of an exchange or platform is to use Google. Read reviews and what others are saying about the platform. When searching for reviews, type the word scam next to the name of the platform to see if they are legit. You may also want to check what previous users of the platform are saying on social media.

Also, don’t forget to read the terms and conditions of the platform to get an idea of how the exchange does business.

2. Insurance fund

The best crypto trading platforms will have an insurance fund in place. This is meant to cushion investors under certain conditions. You will trade better knowing that you are at least protected in certain market conditions.

The Federal Deposit Insurance Corporation will offer cover to some of the exchanges. Traders with such platforms will be protected for a certain amount of their investment.

3. Security features

An important feature for any crypto trading platform is its security features. In particular, look for 2FA or two-factor authentication. This is the accepted security level as per modern standards. If you find that your chosen crypto trading platform lacks 2FA, then it is best to avoid it.

On the other hand, if your platform features 2FA, then you will need to move a step further and check for compatibility. The most widely accepted avenues for 2FA include Yubikey, Google Authenticator and Authy.

In addition, check for any other security features offered by the platform such as custodial storage services.

4. Fiat exchange

As an investor in the crypto market, you will require a mechanism of exchanging local currency into tradable units. Furthermore, you will also need to convert profits that you make from the trade of crypto into your local currency. This is where the fiat exchange comes in.

Note that different platforms will have different fiat options. Not only that but these will also only work with certain banks and not others. It is only prudent for an investor to check which banks are compatible with their platform as well as which options they have for fiat exchanges.

5. Asset prices

Different platforms will also offer different asset prices. This is often influenced by the location of the participant. For instance, platforms based in china will often offer greater volume than other places.

That said, note that discrepancies in asset prices are a good way of identifying a platform that is prone to volume loss and low liquidity.

6. The fees

Most of the crypto trading platforms that you will come across will charge a small amount for each trade. That said, keep in mind that the fees are not standard and one platform may charge more than another.

Fees are an important consideration to traders as they are often charged on a percentage-per-trade basis. Since traders buy and sell regularly, they can incur high costs. Furthermore, there are crypto trading platforms that charge withdrawal fees.

Conclusion

The tips above give great ways of finding a suitable crypto trading platform. Note however that the ultimate decision will be based on a trader’s goals and what they are hoping to achieve. When it comes to the world of crypto, its young nature means that traders are safer when they approach with a degree of skepticism.

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