Pionex: an underrated crypto exchange with free inbuilt trading bots that everyone should make use of.
Hello crypto fam, welcome back!
In my previous article, I explained in detail how I buy stablecoins. You might have noticed that the endpoint of my transfers is Pionex, a crypto exchange you have never heard of. Today I will briefly explain what Pionex is; what it does and why everyone should make use of the excellent trading bots it provides.
What are trading bots?
Trading bots are essentially pre-programmed algorithms that help you perform trades 24/7 based on your preset parameters. Trading can be a time-consuming endeavor that is often a full-time job if you want to do well. As a dentist with a busy work schedule, I struggle to find time to sit down in front of the charts to plan my precise entry and exit trades. I believe most of the readers out there are in a similar plight, you want to trade but simply do not have the time available to do so consistently.
When I first came across Pionex’s inbuilt trading bots, I was amazed. I have always been a huge fan of automation, setting up some form of automated bot that trades on my behalf 24/7 sounds simply fantastic.
However, my mantra is always to be skeptical of anything too good to be true in the world of crypto. So I dug a little deeper to find out more about Pionex as a platform, to see if it’s regulated and safe to use.
What is Pionex Exchange?
You might not know this, but Pionex Exchange is actually a Singapore-based crypto exchange founded in 2019.
Pionex Exchange has some strong backers. It was built by the team behind BitUniverse, which is an all-in-one crypto auto-portfolio and trading bot platform that is very popular in Asian countries like South Korea, Indonesia, and Taiwan. Pionex is also invested by prominent Chinese venture capital firms Banyan Capital, Shunwei Capital, and Zhenge Capital.
Pionex Exchange connects with Binance and Huobi to leverage on their deep trading liquidity, so you can rest assure your trades are always filled at a favorable bid/ask spread.
Pionex Exchange provides inbuilt trading bots which users can use for free and only pay the transaction fees. The trading bots are well designed and easy to use, catering to traders of every level of expertise and need. You can use Pionex’s trading function and bots on their App or just with a traditional browser.
Regulated in both Singapore and the United States
Is Pionex Exchange well regulated? Well yes.
Pionex Exchange was granted a limited license under the Payment Services Act by MAS in July 2020 to providing digital payment token service, you can read the full article here. This puts Pionex under the same regulatory rigor as the likes of Binance.sg, Gemini, Cakedefi, and OKCoin. The bottom line here is, Pionex is at least as trusted as the aforementioned more established crypto exchanges and services, in the eyes of MAS regulators.
In the United States, Pionex was also awarded the MSB license by U.S.FinCEN on April 2020, joining the ranks of big players like Coinbase, Binance, Kraken and Gemini. It is also the first crypto exchange with in-built trading bots that was granted this U.S. MSB license. You can download the full list of MSB registrants directly from the U.S.FinCEN website here. Go check it out for yourself.
Getting started
Unfortunately like most of the crypto exchanges, Pionex Exchange does not support SGD funding. Users have to transfer their crypto or stablecoin from another exchange to Pionex before using any of the trading bots.
My recommendation for a Singaporean crypto trader is
- Do what I mentioned in my previous article: change your SGD to a USD stablecoin on another exchange and transfer them to Pionex.
- Use Binance.com P2P to buy USDT straight and transfer it to Pionex
These 2 methods are the fastest and most direct ways to fund your Pionex Exchange account, please let me know if you’ve found a faster and cheaper way.
Pionex Exchange Fee Structure
Pionex Exchange does not charge you for using their inbuilt trading bots, users just need to pay the flat 0.05% fee on each transaction. This is very low in my opinion, for context, Binance.sg charges 0.6% while Gemini charges 0.25% (maker fees), this even rivals Binance.com’s low trading fees when you use BNB to pay to trade.
Deposits are free of charge, you will pay the withdrawal fee of your respective previous exchanges.
Withdrawal fees are pretty standard stuff across all the different exchanges.
Are trading bots always free to use?
I had my doubts when I first found out that Pionex offers all its inbuilt trading bots for free. Traditionally, trading bots were products that users typically have to pay to use. Take for example 3commas, one of the most popular trading bot platforms out there, users have to pay a monthly subscription fee to use their trading bots. This is also the common revenue model for other trading bot providers.
How can Pionex offer free trading bots while others charge a hefty monthly subscription fee?
Firstly, traditional trading bots are not exchanges themselves. They do not offer a platform for users to trade crypto. Instead, they make use of APIs of other exchanges to perform the trading functions.
For example, to use 3commas trading bots, you would need your own exchange accounts such as Binance or Coinbase, 3commas merely links up the API from your Binance or Coinbase account to trade on them. Hence these trading bots are not ‘inbuilt’ and they do not earn transaction fees from trade, so they have to charge users an additional subscription fee to generate revenue.
The pros of these trading bots are they are separated from your actual exchange account and won’t lead to losses if they go out of business. You can also link one trading bot to multiple crypto exchanges at the same time to run bots simultaneously. The downside is there is you pay the subscription fee on top of your crypto exchanges’ trading fees and you have to manually provide the API to the trading bots.
How does Pionex Exchange make money?
One thing I always look out for when I use a new exchange or platform is its profit model. I firmly believe there are no free lunches in the world and I can only be rest assured if the exchange is reasonably profitable. This means that the operating company has a strong financial incentive to provide secure and quality service to its customers to retain its revenue.
Unlike other trading bot providers such as 3commas, Pionex is an actual crypto exchange and a market maker that aggregates liquidity from large exchanges like Binance and Huobi. It mainly generates its revenue from 2 sources:
- As a market maker, Pionex matches orders from different users to earn a thin spread from doing that.
- Pionex bundles orders from all the bots of all its users and routes them through Binance or Huobi to earn a kickback.
Pionex is reported to be doing over 1 billion in daily trading volume currently and generating a profit of 10 million in 6 months even in 2019, I could not find recent profit reports but one can only imagine the profits generated from that enormous trading volume.
So is Pionex Exchange safe to use?
The short answer is yes.
In my opinion, Pionex is regulated and licensed in both Singapore and the United States under the same regulatory standards as some of the top crypto exchanges in the world.
It’s a very well-established and successful business with over 1 billion in daily trading volume and is hugely profitable. This means the company has an extremely strong financial incentive to continue operating the business well and stay regulated to retain its customers.
To put it simply, it makes much more sense for the company to keep operating and generate consistently large profits than to run away with your crypto holdings.
Of course, don’t take my word for it. In fact, don’t trust anyone in the crypto community easily, always DYOR.
Does Pionex Exchange offer derivatives?
No, Pionex does not offer futures contracts or options, it only provides spot trading, and some very limited leverage token trading.
In my books, this is actually a huge safety factor. Exchanges that do not offer risky derivatives trading have several advantages over exchanges that do:
- Less regulatory scrutiny. Regulators hate derivatives, users have a much high chance of blowing up their accounts on leveraged derivatives. If you take a look at the list of licensed digital token trading platforms by MAS, none of them offer derivatives trading.
- Lower cost of operation. Exchanges that offer derivatives trading will always have to hedge again their users’ leveraged positions, it requires a tremendous amount of resources to build a foolproof infrastructure to continuously monitor their users’ margin situation. This translates to higher operating costs, which means users will not be able to enjoy cheaper trading fees.
- Streamlined user experience. When Pionex focuses just on spot trading, it does not have to optimize its interface for unnecessary derivative trading. It is simply a much cleaner and more reliable interface that can maintain constant uptime.
So although Pionex Exchange does not offer any derivatives, I believe it’s for the better. If I want to trade futures contracts or options, I could always hop over to Binance.com or Deribit for those purposes. You can check out my article on the different types of exchanges I recommend here.
What I don’t like about Pionex Exchange
No one exchange is perfect, that’s why there are so many players in the field to cater to different individuals’ trading needs. Here are 2 things that I don’t like about Pionex Exchange and hope it will slowly improve in the future.
- No FIAT onramp. As mentioned previously, there is no quick and easy way to trade on Pionex as a Singaporean crypto investor (even though it’s based in Singapore). I certainly hope Pionex could follow the footsteps of Binance.sg and Gemini to provide an easier funding process via Xfers in the future.
- Slow customer support. Pionex Exchange only offers customer support via Email and Telegram. My experience with contacting support has been relatively unresponsive. I understand it’s because Pionex is still a new kid on the block and might not have the human resources to build a mature customer support system, I again hope this will improve in the future.
Otherwise, I’m very happy with Pionex Exchange’s current functionality.
Closing thoughts
Pionex Exchange is a gem of a crypto exchange that focuses on spot trading and offers free-to-use trading bots, it’s easy to operate with a user-friendly UI available both on web browser and App. I have been using it for about 3 months and the experience has been hugely positive.
In my next article, I will go through the types of trading bots available and what I currently use to generate consistent income.
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