Cryptocurrency Trading Basics
Cryptocurrency trading platforms are networks that allow for the purchasing, selling, or trading of cryptocurrencies for other virtual currencies or fiat currencies.
People who have an interest in exchanging professionally with options to use advanced exchange tools should select a platform that typically asks users to register an account with ID authentication. However, if you are only interested in trading cryptocurrencies on occasion, there are exchange platforms that allow you to do so without having to open an account.
Different Types of Trading
Exchanges: Exchange platforms build a network of traders and typically charge a set fee per transaction.
Direct Exchange: Some platforms enable direct exchanging among users in different locations to trade cryptocurrencies. Direct exchanging does not include a set market rate but rather allows every seller to establish their own exchange rate.
Third-Party Brokers: These are services that offer an exchange of cryptocurrencies at a set rates, which is not unlike real-life currency exchange brokers.
Things to Watch Out for Before Choosing a Cryptocurrency Exchange Platform
It’s critical to do a little bit of research before you begin trading, so here are some features you should assess before making your decision.
Reputability – An easy way to become more familiar with a trading platform is to ascertain whether the platform has good ratings. In other words, other users’ reviews can tell you so much about what you can expect from an exchange. Reading up on reviews can also potentially help you avoid a major letdown.
Processing Fees – A run-of-the-mill trading platform is expected to disclose their added costs and fees on their website, so before registering, become familiar with the fees they charge for every type of transaction to avoid surprises.
Payment Options – Which methods of payment does the trading platform offer? Does the exchange accept credit cards, wire transfers, and PayPal? It is always prudent to choose an exchange with many payment options. Every payment method has its pros and cons; for example, using a credit card to buy cryptocurrencies typically requires identity authentication and comes with extra processing costs.
Authentication Terms – Many cryptocurrency trading platforms based in the United States, UK, and Canada need users to pass at least one form of identity authentication before proceeding with transactions. After ID authentication, however, some platforms do offer anonymity. Identity authentication may feel like a hassle but is a vital means of preventing fraudulent activities.
Location Restrictions – Select user features of certain trading platforms are only restricted to some countries, so it is important to make sure you get complete access to the features you need in your country.
Different Exchange Rates – Most trading platforms offer varying exchange rates similar to different foreign exchange brokers. By drawing some comparison, you can even spot variations of almost 10%+ in exchange rates.
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Posted on May 22, 2023