Are you thinking about investing in cryptocurrency? A cryptocurrency exchange is a gateway to the crypto world for a new crypto investor. Are you confused about which exchange to start investing in? Are you confused about which crypto exchange to choose among many exchanges to invest in and which exchange will be convenient for you and protect your investment? There are currently so many crypto exchanges in the market, really difficult to choose a best option to begin with. You should know what option and safety features a proper crypto exchange should have to keep your investment safe and secure.
We are going to discuss some metrics in this article that you must check when choosing an crypto exchange for investment.
1. Jurisdiction , Regulatory Clearance
Before registering with any cryptocurrency exchange, you should check whether the exchange is legal under your country’s laws or regulated by your country’s government.
Does the exchange serve customers from the country and state where you live? If the answer is no, then you won’t be able to use the exchange. Investing in any cryptocurrency exchange other than government authorized cryptocurrency exchange may be against the laws of your country and may get you into legal trouble.
2. Reputation of the Exchange
Reputation of the exchange is important whenever you have planned to invest in any cryptocurrency of your choice. Hence, look for reviews on platforms like Reddit. On Reddit, folks are pretty vocal on their crypto experience across various platforms. Map them all out and find out the best that makes sense to you. Once you have the right conviction in mind for an exchange, go ahead and grab the same for your crypto investment. To do a little background research on what past and existing users of a particular exchange have said about it.
3. Security Features
The need for a secure crypto exchange is self-explanatory. Holding coins on an exchange means trusting someone else with that money. In most cases, if the exchange gets hacked or an employee steals coins, investors end up empty handed.
Security is important whenever you are dealing with a crypto exchange. Factors like 2FA and 3FA make complete sense towards safeguarding your crypto. Before investing in any exchange, check the past history of the exchange security and whether it has been hacked or how it behaves to secure user fund after being hacked.
Before investing in a crypto exchange, check where the exchange’s reserves are kept, whether gold wallets are used.Be sure to also know if user funds are being held in a multi-signature wallet. Find out if there is any insurance that the crypto exchange can refund users’ funds in the event of a hack or any Crypto theft.
Traders need liquidity so they can make trades at any time without moving the market too much. This means an exchange must have a high enough volume of orders flowing through its order books on any given day.
In order to get that volume, an exchange must have either a lot of users, or users who hold a large amount of assets on the exchange and trade them frequently.If there are only a small amount of orders available, then there might be no one willing to buy or sell the coins an investor wants to acquire or liquidate. Or, if there are only a few orders available, buying could drive prices up, meaning an investor pays more than necessary. Selling could drive prices down, meaning an investor loses out on some potential profits.
Liquidity is also important during times of high volatility, which happen often in the crypto markets. Less liquidity can exacerbate volatility to the point where prices rise or fall even more dramatically than they would otherwise.
5. Fee Structure
When you are doing trades in volume, a slight difference in fees may end up as a significant margin. That said, exchanges are always trying to optimize their fee structure that can best fit into their target audience expectations. While choosing an exchange see what fees that have been imposed for withdrawal and deposits. Based on that you can always make the right choice and pick the exchange that best serves your purpose.
6. Crypto availability
Currently there are more than 19000 cryptocurrencies in existence. Most cryptocurrency exchanges list cryptocurrencies with larger market caps but smaller cap coin and newer coins not available all the exchange. A small market cap coin is likely to yield higher returns than a large market cap, so choose an exchange that has the largest number of coin listed. Invest in crypto exchanges that have the largest number of cryptos listed and the most trading pairs. It is essential that you have given due consideration to the token pairs. The token pairs will help you get more exposure to the market and balance your portfolio.
7. Ease of Use
Newer investors might feel frighten by exchanges that display order books and have a complicated-looking interface with lots of charts and other information.
If that’s the case, a newbie-friendly exchange might be the best option. Some cryptocurrency exchange sites have “basic” and “Pro” views, allowing users to choose their layout. Others are designed specifically for those getting into crypto investing as a beginner to avoid any potential confusion.
8. Customer Support
Before investing in any crypto exchange, you need to know how the customer support system of the exchange is and how quickly it can solve customer problems.
Newer users, in particular, might have a number of questions regarding the basics of crypto and how the exchange works. Also having good customer care is very important to solve crypto deposit withdrawal and various issue facing with Crypto exchange.
9. Deposit and Withdrawal Limits
Before using an exchange to make crypto investments, it is important to check whether the exchange has any deposit and withdrawal limitations. Many exchanges do not have that facility, especially when it comes to withdraw cryptocurrencies. Be sure to check the crypto exchange’s crypto withdrawal limit before register.
Not just crypto deposits and withdrawals, Fiat currency deposit and withdrawal limits must be checked. Be sure to check the maximum deposit and withdraw amount you can in a day, then register with any crypto exchange.
10. Advance trading Features
Look for features in the exchange like Margin Trading, Spot Trading, NFT Marketplace, Futures Market and so on and so forth. These are essential when you are planning to invest in the crypto market for long term gains. If you are an advanced trader then this feature should definitely be schooled in a cryptocurrency exchange and you should only use cryptocurrency exchanges where these features are offered to you.
Also if you want to invest in cryptocurrencies for long-term then you can invest in Systematic Investment Plan so before choosing an exchange check whether you will get SIP feature or not.
Hence, if you are planning to pick the best exchange for your crypto trading journey, these are quintessential traits that you cannot afford to overlook at any point in time.
Cryptocurrencies are still an unregulated asset class in most countries, so investing in cryptocurrencies is risky. Do your due diligence before any cryptocurrency investment Or you can invest in cryptocurrencies by consulting your personal investment advisor.This article is purely for informational and educational purposes and does not encourage you to invest in any cryptocurreny.