With cryptocurrencies on the rise, exchange platforms are mushrooming one after another to try and attract more of their equally mushrooming number of investors. Unsure about choosing an exchange? Here are tips you should watch out for in selecting the most ideal platform for you.
How To Choose A Cryptocurrency Exchange
1. Availability (Where You Are Located)
There are certain exchange platforms that operate only within a limited number of countries. And a platform’s popularity isn’t necessarily a good gauge for assuming that your location is included in their scope.
This step is easy and practical. It has nothing to do with cryptocurrencies being legal or banned where you are (even when it’s the latter, access to exchange platforms are still possible because “cryptocurrency” IS a legal enterprise). Instead, it is more about where the exchange can be intermediated by the banks in your country.
If there’s no tie-up between the two, you won’t be able to transfer you “hard” money from your banks to the exchange, and vice versa. In case the website isn’t clear about this, feel free to ask their customer support.
2. Cryptocurrencies Handled By The Exchange
The “big names” in cryptocurrency are often available for buying, selling, and trading on most, if not all exchanges. But if you are looking into diversifying your crypto-investing (as we’ve recommended in several of our other posts) and are contemplating giving lesser-known digital currencies a shot, you will have to check if your chosen exchange allows trading with said crypto-brand.
Besides inquiring if trading through your fiat currency is permitted, you need to factor in liquidity for filling orders. Liquidity here refers to conversion without significantly affecting pricing. If at all. Is there an option for filtering and selecting various channels that have less of a pricing impact during conversion? Ask the exchange platform about issues like these.
3. Fees And Add-Ons
Third on this list is “fees”. Being budget-realistic in this regard will help you sift economical exchanges from that which aren’t. Before we continue explaining number 3, note that higher fees do not always equate to better, more efficient platforms for crypto-trading. At the same time, too-low fees should have you asking if there are underlying charges per transaction which are not clearly stated at the get-go.
That being said, regular charges are allotted for every buy, sell, and trade movement you make on an exchange. High-frequency investors and day-traders look into this with meticulousness because these fees can accumulate and eat away at your fiat money.
Although crypto-platforms are not mandated to disclose every detail of what they charge (usually, a mere general pricing overview is publicly released), compare rates and choose that which is comfortable to your pocket.
Also, be wary of “spread fees” (a description for an amount provided for non-commission based intermediaries). The exchange has the option not to release this information unless requested. Just to give you a heads-up, spread fees can go as high as 5% of the trade fee itself.