You’re trying to search for a cryptocurrency exchange to use, but the search engine gives you a bunch of ads, marketing articles and custom publications? We have written an objective article to help you choose a cryptocurrency exchange, pointing out the factors that are most vital to pay attention to.
Usability
The interface of the exchange should be easy to use: a clear structure, a comfortable color gamut for a view, and emphasis on logically significant information. In general, when looking at a good interface, many things should be intuitive, regardless of whether you are a beginner or a professional.
Security
Find out if the exchange has ever been hacked; and what security measures are taken against hacker attacks. Unfortunately, no service can guarantee you complete security, but some exchanges have more complex security systems than others.
Mobile app
Even if you’re thinking that you do not need a mobile version, you will certainly want to be aware of what is happening in the market during the trading time. If there is a mobile version, it is possible to control the situation — to close or open a position, edit an order, without worrying about what will change until you get to the computer. It’s even better if you have a tablet, and the exchange has an adaptable application for the device: the tablet is great for stock trading, mainly due to the larger screen size compared to a smartphone: it’s more convenient to look at graphs and other data, but at the same time the tablet is smaller and portable compared to a computer.
The number of fees
It’s obvious — the lower the fees, the better. Many exchanges offer a flexible system of fees for their users: depending on which side the trader takes when making an exchange transaction. Each transaction takes place between two parties: the maker, whose order is in the book of orders, and the taker, whose order is reduced with the order of the maker. Makers are so named because their orders create (make) liquidity in the market. Takers are those who take liquidity from the market, agreeing to the price of the makers. As a rule, fees for makers are lower. Thus, if you want to make a trade as a maker and minimize your fees, use limit orders and place them at some distance from the market price (buy orders are lower, sell orders are higher than the market price). Higher fee costs for takers can be justified by the immediate execution of the transaction.
You will find that sometimes on stock exchanges, the percentage of fees is lower for traders with large trading volumes.
Moreover, pay attention to the size of fees and restrictions on deposits and withdrawals. Since transactions go through the Blockchain, commissions for sending funds are inevitable. These fees are paid to miners, not the stock exchange; the actual value is a few dollars per transaction. Daily withdrawal limits, as a rule, depending on the level of account verification.
Volume
Trading volumes are important for two main reasons:
- The greater the trading volume for each individual instrument, the lower the volatility and fewer opportunities for market manipulation, pumps and dumps. (check out our previous article).
- If you enter into transactions for substantial amounts (relative to the volumes being traded), then your actions will significantly affect trading, limit orders will be executed for a very long time, and perhaps not completely, and when using market orders, the execution price will be worse. Such trading is inconvenient and expensive and is definitely not suitable for beginners.
Fiat
Fiat currencies in trading pairs simplify funds deposition and withdrawal. You won’t need third-party exchange services to replenish your exchange wallet or withdraw the currency.
In addition, the possibility of conducting fiat money transactions on a cryptocurrency exchange indirectly indicates the seriousness of the exchange: it is not so easy to obtain licenses for exchange operations with fiat money.
Order types
If you are new to trading, you will only need limit orders to begin with. There may be a market order and a stop order, depending on your trading style. However, if you already have experience on the stock exchange, you know that trading can be more convenient with the use of advanced orders such as stop-limit, trailing stop and scaled, and using OCO (one cancels the other) and OTO conditional orders (one triggers the other) you can even automate simple trading strategies.
The number of cryptocurrency pairs
Currently, there are more than 2,000 cryptocurrencies and tokens traded on various exchanges. If you are interested in a particular project and you want to trade it with its tokens, find out in advance which exchanges use these tokens. You should also pay attention to the trading volume for the tools you are interested in, as these should not be too low. If you do not have specific preferences, then there isn’t much point in choosing a stock exchange with the largest number of cryptocurrency pairs, since many of them will have a low trading volume. Usually, a dozen main cryptocurrencies and, accordingly, several dozen cryptocurrency pairs are enough to ensure diversification and diversity in trading.
Demo version
Using the demo version is very convenient for both beginners and professionals because it provides an opportunity to test the interface convenience in conditions close to real ones, as well as to orient in the functionality of the exchange, without risking the loss of real money.
The following factors are quite specific and are not targeted at all users:
- Mandatory verification. Many people are now concerned about the safety of personal data and do not have the desire to once again disclose information about themselves. On some exchanges, it is possible to trade without verification, but, as a rule, in this case; daily withdrawal is limited. Rate how important this is for you, and how critical the restrictions are.
- Referral program. Having a referral program on the stock exchange can be a pleasant addition to you, and over time, a significant source of income.
- Support. The exchange should have a 24/7 technical support service available to all its users.
- Check the availability of the API, if you intend to upload data to debug trading algorithms, use robots in trading or otherwise use the API.
