While it's complex to find the perfect cryptocurrency exchange, interested investors and traders must check for a few important factors to secure their investments. Carefully checking the right platform prevents distractions, hacks, or wasted effort and money.
Determining your objectives allows you to set the goals you want to accomplish. Do you prefer to trade in and out, or are you investing for a long-term basis? Investors and traders have different perceptions and goals.
Once you've determined your purpose, it's time to step inside the crucial features you need to consider and get familiar with crypto-mania as it's getting everyone on a craze. From major financial organizations and enterprising millennials—everyone wants to dig deeper into this incredible innovation's capabilities.
Learning how you can cash in into this craze is essential. That means choosing the right cryptocurrency or finding an Australian crypto exchange that complies with laws or regulations on your location to prevent fraud and secure protocol for transactions. It's imperative to research before investing or buying cryptocurrencies for your benefit.
How Do You Choose A Crypto Exchange
Here are the most important features that you have to check when you choose any crypto exchange to prevent investment loss or wasted effort.
Every crypto currency exchange has its method when it comes to security. Check if the exchange offers you a 2FA (two-factor authentication). If the trade doesn't have this, then there may be issues with today's security standards.
Check which two-factor authentication mode it's most compatible. Knowing two-factor authentication avenues provide great investment protection. Every crypto exchange has its unique security procedures with checking for, like custodial storage and cold storage services for assets.
Evaluating every cryptocurrency exchange prevents you from dealing with any nefarious activities, exit scams, or hacks. There are tons of trades involved with this process, and doing a comprehensive background check for reputation is a precaution.
Cryptocurrency is a massive space, yet it's still new. Checking terms and conditions on every platform is useful and notes any possible red flags.
- Anti-Money Laundering/KYC
Every exchange for each location, offers, or practices complies with certain rules and regulations. Some exchanges require participants to present personal information when creating an account.
Anti-money laundering practices and KYC (know your customer) are vital per exchange, especially when withdrawing funds or lifting specific limitations. It obligates clients to present copies of identifications or proof of residence to prevent fraud and other activities related to security threats.
Nowadays, many exchanges ban clients that are residents of certain regions.
- Fiat Exchange
Finding a fiat exchange compatible to transfer with international currencies is vital. You'll use this to trade or cash out your profits in the future.
There are crypto exchanges compatible with fiat at certain banks, while some are not. Checking in which banks are compatible and tradable is essential.
- Insurance Fund
Checking for insurance funds for your chosen exchange comes with great benefits if you'll be under uncertain circumstances. Some transactions are covered under the FDIC (Federal Deposit Insurance Corporation) that protects specific numbers of US fund users.
The volume of participants per trading platform varies at a given time with the number of traded assets. It affects how users can exit or enter positions easily. With low-volume exchange, it will be challenging to sell your assets on the market at a profitable price and may force you to lower down your exchange offers.
While checking exchange volume is complex, you can use tools to compare data such as OnChainFX, CoinMarketCap, and more.
- Leverage Trading
The stock exchange often provides leverage trading. It enables traders to borrow a specific amount of money to trade based on the number of funds traders hold. It's vital for traders who are eyeing for short-term goals with large profits. Most platforms have their set rules; you need to check with liquidation levels or margin calls.
- Asset Selection
Finding the right crypto exchange means you need to check crypto assets available like Ethereum, Bitcoin, or Litecoin. Though there are some smaller token and cap coins, it's vital to know which one is available.
- Asset Prices
Participant location or volume affects the asset price for every exchange. Noting discrepancies can help select the right cryptocurrency exchange. Price discrepancies on assets can signal red flags for possible low volume or low liquidity.
- Exchange Fees
Exchange fees are based on each platform and the percentage of the trade. While it may be a small fee, it's vital to check some exchanges that offer withdrawal limits and fees.
Understanding the different features of cryptocurrency exchange can help you decide where to invest or trade. Doing a little research won't hurt when you plan to participate in this industry. While factors vary per individual preference and needs, it helps find fundamental features to set your goals and expectations.