The cryptocurrency market is an emerging industry with no shortage of options for trading. From decentralized exchanges to centralized exchanges and everything in between, it’s essential to know which cryptocurrency exchange is good before committing your money.
Although the crypto world is booming, there are still questions about the future of cryptocurrencies. In this article, we’ll explore some of the most popular cryptocurrency exchanges so that you can make an informed decision about where to trade.
What Is a Cryptocurrency Exchange?
A cryptocurrency exchange is a website that allows you to buy, sell or exchange cryptocurrencies for other digital currency or traditional currency such as US dollars or Euros. There are many different cryptocurrency exchanges available, and all have their pros and cons.
There are many reasons you would use an exchange, whether it be to trade one cryptocurrency for another or buy cryptocurrencies with fiat (government) currency. The main benefit of trading on an exchange is the ease of use compared to other methods. Exchanges typically allow you to make a trade quickly and easily without searching for a buyer/seller. Another advantage is that they often provide more trading pairs than most other exchanges, allowing you access to not only Bitcoin but Ethereum and Litecoin.
Exchanges are also an excellent place for new traders to start, as many allow you to trade with minimal required funds and offer small amounts of trades so you can get used to trading without risking too much. You can even practice at home on paper or with play money before doing it for real. Some exchanges have features such as advanced charting and technical analysis tools that can also help those who want more from their trading platform.
Factors to Consider While Choosing a Crypto Exchange
1. Jurisdiction
Every country has different taxation policies toward cryptocurrencies. People have started to trade crypto because of its decentralized and easygoing nature. However, tax departments across countries have been noticing this for some time now. Some governments are looking forward to taxing crypto gains, while others do not consider it taxable income.
Jurisdiction largely depends on where you live or your citizenship status. Depending upon this factor, you might be forced to trade in your local exchanges that comply with the regulations set by your government/country.
2. Liquidity
Another critical factor is the liquidity of a cryptocurrency. Imagine selling your coins only to find no buyers for it for a couple of days! It can be an expensive affair if you have bought them at a higher price and the prices suddenly go down, leaving you with a significant loss on your hand. Moreover, if you want to sell your coin quickly, then prefer exchanges having high liquidity so that you get better prices every time.
3. Trading volume
One key factor when choosing an exchange is its trading volume. The trading volume tells us how many units of cryptocurrency are being bought and sold within a 24 hours period, which helps us determine how big or small the market size is. You might come across some exchanges with low trading volume, and it is not a good idea to trade on these platforms as they might be running a scam.
4. Cryptocurrencies offered
Another critical factor is the kind of cryptocurrency you want to buy/sell. At first, there were only Bitcoin and a few other cryptocurrencies, but today there are more than 1,500 coins available on the market. Choosing an exchange offering all these coins would be great so that you don’t have to leave your favorite platform anytime soon for trading altcoins. Also, consider exchanges that give access to some real-time news feed related to cryptocurrencies, like CoinMarketCap. This makes it easy for traders who want to invest in multiple cryptos in one place without any hassle.
5. Trading fees & payment methods
Different exchanges have different trading fee structures. It is essential to check whether they are being charged by the exchange or it’s being done by the market maker. Also, you have to check all the payment options available before signing up with an exchange because sometimes, if not available in your country, then you might not be able to trade at that particular platform.
6. Trading tools & research
For traders, there are some tools/features which are a must-have when choosing a cryptocurrency exchange. Charts, real-time news feeds about cryptocurrencies, widgets for price tracking, and more features should be present to make it easy for traders to monitor the market trends and take necessary actions accordingly. Moreover, key information about each crypto can also be found on the exchange, like its current market price, maximum supply, volume (24h), circulating supply, and forking information.
7. Customer support
Each cryptocurrency exchange should have good customer support as there might be technical difficulties that need immediate attention. While making this choice make sure you look out for a live chat option on their website, as all modern platforms now provide such options as compared to email support only which takes a longer time to resolve issues if any arise during or right after trading.
8. Deposit and withdrawal limits
While trading in high volume, it is vital to check each exchange’s deposit and withdrawal limits. It can be frustrating for some traders if they are limited by withdrawal/deposit amounts, which means they cannot trade unless they verify their accounts (which is highly unlikely with most exchanges).
9. Geographical restrictions
Finally, make sure you carefully read whether the exchange allows you to use your country’s IP address or not when accessing its website because sometimes these websites might trigger geo-blocking features which makes it impossible for people living in certain countries to access them. Moreover, some exchanges like Bittrex limit new users’ registrations due to high demand, so make sure you choose wisely before signing up with any exchange.
The Bottom Line
Choosing the proper cryptocurrency exchange can be overwhelming, but it doesn’t have to be. Take these three critical points into consideration before choosing your digital currency exchange: choose a reputable company with high-security standards, find out if they offer coin-to-coin trading or just one type of crypto, and verify that you can deposit fiat money onto the platform.
If this list seems daunting for you, then let Mudrex’s automated trading bots help you strategize. Mudrex does everything for you from the exchange through API keys, and does not require any withdrawal permissions. It is safe to say, Mudrex is the high-performing automated trading platform you are looking for.
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