Whether you love them or hate them, cryptocurrency exchanges are an essential part of any serious trader’s life.
Today, a number of exchanges exist across the world and serve different markets and countries.
As the demand for cryptocurrency exchange services is growing, many exchanges are having difficulty keeping up with demand. This is both in terms of website infrastructure and in customer support response times.
Exchanges are also common targets for hacking attacks and many have suffered significant losses in the last few years. The most famous of which was Mt Gox. Today we are going to take a look at some of the most important things you should consider when choosing a cryptocurrency broker.
We will then also take a look at some of the best brokers and how they stack up according to our requirements.
What should you look for in a good exchange?
Before you can actually settle on a broker that you are comfortable with, you have to make sure that you know all of the things that you need to be looking out for.
We break them down for you.
Broad asset support
In an important sense, an exchange is only as good as the assets that it supports. For example, if an exchange only supports BBQ Coin, BitConnect Coin, and nothing else, it doesn’t matter if the exchange has the best customer support or the most reasonable fees.
For our first category, we need to consider if the exchange supports enough assets to justify signing up and using it. Moreover, it does not help if an exchange has an asset but there is virtually no volume on it. You need to have healthy order books on the exchange if you are interested in being able to trade appropriately.
When exchanges are hacked, the result is often that everyone who held assets on the exchange will lose a percentage of them. This is true whether or not their particular assets were hacked.
In order to reduce the chance of loss, we need to choose exchanges that maintain ideal security practices. Additionally, they should have never been hacked before, or have not been hacked for many years.
While it is best practice to not keep assets on an exchange, it may be necessary from time to time to keep some on an exchange in order to have various limit orders in place. Security needs to be a priority.
When it comes to your trading profitability, there are certain things that are in your control. One of the things things that is not in your control is the fee that the exchange will charge.
There are a number of fees that the exchanges will implement including trading fees, deposit fees, withdrawal fees etc. Some exchanges may have attractive rates in the one and hit you in the other.
Exchanges also use a range of different fee structures. They may use fixed fees or they may use variable. They may have lower fees for those traders who are trading above a certain value. It is imperative that you have full clarity on the fees that you will be facing.
Funding / Withdrawal Options
Before you can start trading on an exchange, you have to be familiar with their funding and withdrawal policies. You have to know what funds they accept and what their KYC procedures are for withdrawals.
Some exchanges will offer you funding options in a fiat currency. These are usually through wires, credit cards or the sort. They are termed “Fiat gateways” and are usually used by traders to exchange their fiat money into a popular cryptocurrency.
Of course, the most important question one has to ask about an exchange is the withdrawal policy. Some exchanges have daily limits. Others require some form of KYC and identification. There is nothing worse than having funds stuck on an exchange for an extended period of time.
Finally, one issue that should never be overlooked is the customer support offered by the exchange. For this, your best solution is to check the internet for comments about the exchange and their customer support.
If you see dozens of posts from people saying that they never get responses back, the support never offers a proper solution, or the support is very unprofessional, you may want to think twice before signing up.
Efficient and Intuitive Platform
When it comes to the trading platform, the most important characteristics are how effective the trading engine is and how easy it is to use.
Many may attest to the frustration you may feel in the event of an order that is delayed due to a slow execution. This usually comes down to the power of the servers and network architecture at the exchange. Crypto prices move quickly so execution is essential.
There is also merit in having a platform that is relatively easy to understand and operate. The best trading platforms are those that will have all the advanced trading features while not giving up much in the way of clean user experience.
These exchanges are the types that are well suited to all kinds of traders. They have the hard-core tools that more seasoned traders will demand. Yet they are also relatively user friendly and are not too intimidating.
Some Brokers to Consider
Now that you know what you need to be looking out for, we can take a look at some brokers that meet these standards. All of these brokers are also regulated which is always an added benefit when it comes to client protections.
Plus500 is a large CFD provider that hails from Israel originally. They are, however, listed on the London Stock Exchange as a publically traded company. This just shows the true scope of the broker.
In terms of all the qualities that they have above, they have a range of cryptocurrency assets, are one of the safest brokers, have spreads from only 5 pips and are incredibly easy to fund with.
In terms of their platform, it is pretty efficient and is available to download as either a Windows client or as an app on your phone. They also have pretty efficient and responsive customer support.
You can read more about them in this Plus500 Review.
One of the largest brokers in Europe is IG. They are fully FCA regulated and are used by hundreds of thousands of traders across the world.
However, they fall slightly short when it comes to the range of cryptocurrency assets that you can trade on the platform. At this current time they only have Bitcoin, Ethereum and Bitcoin cash.
Having said that, they have incredibly responsive customer support and were always willing to help us out. Moreover, if you ever want to trade assets other than cryptocurrency, they have a range of Stock and Forex CFDs for you to trade.
E-toro is another broker like Plus500. While they are not listed on the London stock exchange, they do have an FCA licence.
In fact, if you have ever taken the London tube or have ridden in a cab then you were likely to have seen their ads on the cabs.
There are numerous cryptocurrency assets that you can trade at E-toro. In fact, they are one of the cryptocurrency brokers with the most asset coverage of all of them.
Another thing that E-toro has pioneered is something called “social trading”. This is where you can follow other traders and see what trades they are making. Hence, you can follow only the best traders and make money like that.
E-Toro also allows traders the benefit of managed accounts where there is a seniour advisor that will deal with the trader for all administrative purposes. It is important to note that these are not related to investment advice.
As we have shown, it is really important that you know what you are looking for between you embark on finding a cryptocurrency broker. These requirements are essential if you are to have the most stress free and lucrative trading record.
You should also consider one of the three cryptocurrency brokers that we had presented. Which one to use will depend on what you are trying to get out of your trading. If you are a high volume trader that wants a reputable regulated broker then you should consider between Plus500 and IG.
However, if you are interested in following other traders as they trade a range of different cryptocurrencis then you should consider a broker such as E-toro.
No matter which broker you do decide to go with. Make sure that you implement all the required risk management procedures and you never risk more than you can afford.