Security of the Exchange
This is the most important of all. You should be careful when you are investing your hard-earned money. Make sure the exchange has a secure protocol with two-factor authentication, which gives you a safe and secure login.
With so many scammers prowling on the internet, you have to be very careful. Make sure you do a bit of research regarding a particular exchange’s security features. Go through the user comments and also talk to a few customers of the exchange if you can. Either way, don’t create your account at an exchange until you are completely sure that it’s safe and secure.
As cryptocurrencies are decentralized, it’s vital for exchanges to enforce stringent security measures in place to make sure your digital currencies are safe from unethical individuals and shady transactions.
Ethereum and Bitcoin are two of the most prominent cryptocurrencies. A good cryptocurrency exchange should not only offer these two digital currencies, but it should also provide you with plenty of options to purchase other types of coins.
The main advantage of this is that it prevents monopoly in the cryptocurrency arena and also stabilizes the risk that cryptocurrency contributors have to deal with.
Choose an exchange that has listed a good amount of cryptocurrencies and can offer you other alternatives if a specific digital currency suddenly starts facing some regulatory issues.
An exchange should have an active community and encourage its consumers to take part in healthy discussions on their platform, say Telegram. Any exchange that is dormant with no useful user engagement is something you should avoid. Being a part of the cryptocurrency community that’s kept active by the exchange is a sign of safety and security. In that regard, it’s easy to trust the exchange.
Make sure you choose an exchange that is active and has an active community run by authentic admins of the exchange. Apart from the tickets you raise in case of any issues on the exchange, you should also be able to reach out to them for any minor issues through the community. Suppose if you face a major issue and it’s not resolved, you can always project your views on the community and let others know. This starts a discussion and will compel the admins to take your issues seriously.
If the exchange doesn’t have a cryptocurrency community, then you will be left with no much validation from other users in case of a major issue that has gone unsolved. Thus make sure the exchange you want to choose has an active community.
It goes without saying that the exchange should demonstrate great customer service. Whether you are going through the verification process or have a query, the customer service staff should answer you quickly and efficiently. They should be able to answer the most complex cryptocurrency queries in an easy way and provide you with proper advice.
Time is of the essence in cryptocurrency trading, so the customer service staff of the exchange should be well-equipped with all the answers regarding cryptocurrency and should give you proper support so you don’t lose an important opportunity.
Before you go ahead and register yourself with the exchange, shoot an email and see how they respond. Don’t hesitate to ask complex questions. They will be eager to respond to you, of course, as you haven’t yet registered with them. But still, their response should give you an idea as to how efficient and useful they might be.
High costs and fees will lessen the value of your trades. Thus it is important you find an exchange that helps you strike a proper balance. If you are trading a lot, then look for an exchange that charges reasonable fees. On the contrary, if you are trading sporadically, then a higher fee structure doesn’t matter much. But having said that, make sure you look for an exchange that provides better security for that high price.
In the end, it all boils down to how often you trade. If you are simply planning to hold your coins in an exchange, the fee structure might not matter much to you. On the other hand, if you are planning to trade well and often, you should find an exchange that keeps its fee to a minimum. Else, it will severely cut into your profits.
Liquidity refers to when there is a sufficient number of sellers and buyers of a particular coin, which makes it qualified for trading. You should look for an exchange that has a high liquidity so that it becomes easier for you to sell or buy cryptocurrencies within the exchange, which in turn leads to hassle-free transactions and competitive pricing.
Put simply, a high liquidity means less effort on your part. More liquidity is simply a direct outcome of a high number of users. If the exchange has a lot of users, it’s easy to trade. An efficient coin exchange is one that can help you trade without any hassles. Meaning, the exchange has access to a lot of other traders who are also looking for the same deal as you. Cryptocurrencies are quite vulnerable and their prices keep fluctuating. So if you are attempting to time the market, your exchange should be able to find you a partner quickly.
Frequent Upgrades and Ease of Use
A good exchange will always update you on its latest upgrades, either on the app or on the site: be it some new features, order types, trading mechanism, IP whitelisting, or security enhancement. They should never fail to tell you if they are moving to decentralized cryptocurrency exchange. In other words, they should let you know about every little change they bring about.
As with any other website or an app, your experience on it should be easy and user-friendly. The user interface should be easy on the eyes, easy to navigate, and should be devoid of any complexities. It doesn’t matter how well-reputed the exchange is if the UI is bad and is not easy to move around the site. If the exchange has a mobile app, it’s still better. It helps you monitor your account on the go.
Transparency of an exchange is extremely important. If a particular cryptocurrency exchange is not being clear about their services, fee structure, upgrades, etc., then it’s not right for you. A good exchange is always transparent with its customers. They should always keep you updated about the latest offers, latest coins listed, the withdrawal fees of particular coins, etc. Nothing should be kept from you.
Also, if the exchange is listed on sites like Coinmarketcap, then you can always trust it implicitly. To have the easy way, look for exchanges that are listed on reputed sites like Coinmarketcap. Those sites vet the exchanges before listing them on their platform.
Margin trading refers to the practice of borrowing money from a broker to buy or sell more cryptocurrencies than you can afford. If you are looking to go into this type of trading, then look for an exchange with functionalities that enable you to take part in margin trading.
It shouldn’t be the case when you want to participate in margin trading and your exchange doesn’t support it. So make sure you know if the exchange does support margin trading before you create an account there.
To Wrap Up …
Choosing the right cryptocurrency exchange is the most important step you can take towards your cryptocurrency investment journey. To understand how to choose the right exchange, identify your goals and priorities well, and keep in mind the above ten points. If the exchange is bad, it doesn’t matter how astute you are. Be wary of unscrupulous exchanges and choose wisely.