Trading in cryptocurrencies is analogous to trading in stocks. A crypto currency trading platform, just like the stock market, brings buyers and sellers together and offers the tools for the two parties to close a deal.
Despite the basic similarities between trading with stocks and cryptocurrencies the crypto market is not yet as well-established or regulated as the stock market, this plays a major role in how to choose an appropriate trading platform.
Whereas most stock exchanges have institutional support and are well regulated, the crypto market is still quite young. The first criteria for choosing a crypto trading platform should be their reputation. Check for reviews on the platform you wish to trade with like this XTRgate platform review to know if the platform is reliable
On top of the list should be security. The best platform will be useless if cybercriminals manage to steal your assets; check on how diligent the platform is in identifying users and how secure login processes are. It is also important that the platform complies with international law regarding transactions and money laundering.
Liquidity, both in the sense of having sufficient funds and sufficient trade volume. Having crypto assets does not automatically result in liquidity. Make sure that the platform you choose is capable of executing your orders and paying you out if necessary.
Trading with cryptocurrencies is all about bits and bytes, you can theoretically secure your assets on paper but practically there is no paper trail for crypto transactions. Sound technology is of paramount importance. It will not help you much if the system collapses during market turbulence, risking losses or opening vulnerabilities that hackers could exploit.
A trading platform earns its money with the services it provides. The basic service that every platform provides is facilitating a transaction between a buyer and a seller. This will be the main pricing point to compare but there are lots of other transactions that you should keep in mind like currency converting rates, transaction fees or account fees. Depending on your trading habits and volume, small differences in fees can add up to a considerable amount.
Asset prices: As we mentioned before, the cryptocurrency market is new and not as established as other trading markets. Few trading platforms use market makers to add market depth and reduce volatility. This paired with the decentralized nature of cryptocurrencies often leads to price differences between platforms. Smaller trading platforms might not be able to sell or buy an asset for you at the same price as larger platforms, price fluctuation could also be higher than their larger counterparts.
There are over 1800 cryptocurrencies on the market, the larger platforms usually offer trading for a few of the best known coins with higher trading volumes. Depending on your strategies you might be interested in speculating on newer, less prominent cryptocurrencies.
It is common practice among more engaged traders to have accounts on different platforms and have a more secure wallet for parking assets. Normally cryptocurrencies are traded against each other, trading pairs, so you only need one platform that has good payout conditions, the others can be used for trading only. Moving cryptocurrencies between platforms is much easier and cheaper than exchanging with fiat currencies.
Regardless if you are a veteran trader or an absolute newbie, due diligence is the key to choosing an appropriate trading platform. The abundance of information on the internet can be a blessing and a curse. Try to get your information from trusted and experienced sources. See what your peers say, someone who speculates with millions a day has different priorities to someone who wants to build wealth or to someone who is playing around with a few hundred dollars for the fun of it.