How to choose a cryptocurrency exchange?

Why is the right exchange choice important?

Everyone who plunges into the world of digital currencies sooner or later faces the need to choose an exchange. There are a lot of cryptocurrency exchanges, and each has its own advantages and disadvantages. So, some trading floors are distinguished by a large selection of currency pairs, others by their convenient interface, others by their advanced functionality and many technical and graphical analysis tools, fourth are the fastest to add new tokens right after the ICO, fifth ones offer advanced security settings, etc.

In most cases, crypto enthusiasts are not limited to just one trading platform. For example, one exchange is used for daily trading of highly liquid assets, the second – for trading high-risk altcoins, the third – for buying new crypto tokens “for long term”, and the fourth – for buying or selling crypto tokens that are not represented on the other three sites, etc. Here there may be many options.

Do not forget that choosing a stock exchange, a trader has to trust funds to a third party. Decentralized exchanges, which give full control over the private key and, accordingly, the user’s funds, are still only at an early stage of development. Thus, this short guide will focus on the selection criteria for “traditional” or centralized crypto sites.

What criteria should be followed when choosing an exchange?

There are quite a lot of exchanges, and the choice is an individual matter. Nevertheless, the main criteria that you should pay attention to when choosing a trading platform are as follows:

  • reputation (before raising funds on an unfamiliar exchange, it is better to read reviews about it on forums such as bitcointalk or Reddit);
  • commissions (each time buying and / or selling digital currency, the user pays a commission fee to the exchange; it may differ at different sites, but is usually in the range of 0.1-0.25%);
  • the number of trading pairs (some users prefer to trade highly liquid cryptocurrencies from the “top 10“, while others prefer volatile and less liquid altcoins);
  • liquidity (in many respects this indicator depends on the daily trading volume; if the platform is liquid, buyers and sellers will appear in a glass every second, and the candlestick schedule will be smooth, without frequent “spikes”);
  • payment options (some exchanges support many payment methods, including bank transfers, while others only allow cryptocurrencies to be deposited and withdrawn);
  • requirements for user verification (some exchanges, for example, Poloniex or Bittrex have rather stringent requirements; others (for example, Binance) also allow unverified customers to trade, but with a certain daily turnover limit.

Among other criteria for the selection of the exchange can be identified:

  • The home country of the trading platform (for example, Japanese and South Korean exchanges may “prevent” users from other countries);
  • convenience of the user interface;
  • the availability of various technical and graphical analysis tools;
  • the availability of convenient statistics on operations;
  • the possibility of margin trading (and, as a result, the possibility of obtaining passive income from providing loans to other participants of the exchange), etc.

This cryptocurrency exchange is really quite popular and is quite suitable for both beginners and experienced traders. It was founded not so long ago – in 2014, but thanks to a convenient user interface, a wide range of altcoins and the rapid addition of new tokens, Poloniex was able to take the lead in daily trading at one time.

Currently, the listing of the exchange contains about 100 different crypto assets and four types of markets (\ BTC \ ETH \ XMR \ USDT). The site can work in three main modes:

  • Exchange – spot trading (without leverage);
  • Margin Trading – trading with leverage (up to 2.5x);
  • Lending – a mode where you can lend to other exchange participants trading using leverage.

For each of the modes there is a convenient opportunity to analyze profit and / or loss, in the context of each currency pair. These analysis tools are in the My trade history & analysis section.

Charts are equipped with a minimum set of analysis tools, which includes moving averages (SMA and EMA), Bollinger Bands and Fibonacci levels. Also, Poloniex has the ability to create pending orders (Buy Stop, Buy Limit, Sell Stop, Sell Limit).

There is a mobile version of the Poloniex exchange, as well as applications for Android and iOS. At the end of last year, this exchange introduced a mandatory verification of user accounts.

Where else are many altcoins traded?

Bittrex is a real “altcoin home” (there are more than 280 of them). Largely due to the avalanche of demand for alternative Bitcoin digital coins, Bittrex at one time consistently ranked among the top 10 cryptocurrency sites in daily trading volume and even held a leading position.

Bittrex has a slightly less user-friendly interface when compared to Poloniex. Charts, on the other hand, are equipped with many technical and graphical analysis tools.

Exchange verification is required. Trading commissions are 0.25%.

In general, the Bittrex interface is quite convenient and thought out, there are various security settings. In May 2018, the exchange added support for the fiat dollar, but the option is so far only available to customers from some US states.

And if I want to trade the most liquid assets?

Then you are at Bitfinex, where mostly the most liquid cryptocurrencies from the “first tier” CoinMarketCap are represented. Indisputable advantages of the exchange: professional charts from the TradingView service, ample opportunities for statistical analysis of user activity and many security settings, notifications, as well as an interface.

Bitfinex supports fiat currencies, the “Financing” mode (similar to Lending on the Poloniex exchange) has been implemented, which allows you to receive passive income from providing loans to other users trading on this site with leverage. The exchange supports various types of orders, including stop limit, trailing stop, Fill or Kill (“execute or cancel”), etc.

Bitfinex’s reputation is beyond doubt, especially after the exchange cleared all debts to users after the 2016 hack.

Of the minuses of the trading platform, it’s possible to note a somewhat complicated interface, which may seem to beginners overloaded with all sorts of intricate “tricks”. Nevertheless, the exchange deserves attention, especially among crypto enthusiasts with solid capital, preferring highly liquid instruments and a solid approach to technical analysis.

What about Binance? Many talk about this exchange.

This trading platform was created relatively recently, however, it has consistently held leading positions in the daily trading volume. There are many altcoins on Binance (over 300), the list of supported coins is constantly updated.

The exchange interface is quite convenient and not overloaded with elements, but there are many different security settings.

Also on this exchange there is its own token – Binance Coin (BNB), which allows saving on trading commissions. In April 2018, the trading platform added the ability to convert small balances on the balance sheet (‘Convert to BNB’) into its own tokens.

Binance is popular among both beginners and professionals.

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