Crypto traders buy and sell cryptos via special exchanges. Forex brokers have also announced Bitcoin and altcoins trading not long ago. For those who have already had experience in trading, there is nothing difficult in dealing with crypto trading platforms. However, those who start their trading or investing careers may be confused. We are going to give you a beginners’ guide on how to use cryptocurrency trading platforms and what their main features are.
Main types of crypto trading platforms
Many beginner traders think that all the exchanges are almost the same and the main difference between them is the number of cryptocurrencies offered for trading. However, the difference between trading platforms is larger.
The first and the most popular type of crypto exchanges offer both fiat and cryptocurrencies for traders. Such trading platforms allow users to place different types of orders including market, limit and others. Nowadays such trading platforms offer margin trading for their clients.
The second type has less functionality and allows clients to place bids and to find buyers and sellers. Those places have fewer analysis instruments (or even no forecasting tools) as their main idea is to provide users with an opportunity to exchange cryptocurrencies among each other.
The third type is not an exchange, but a broker. Many Forex dealing companies have paid attention to the crypto market, which became even more popular than fiat currencies trading. Forex brokers offer Bitcoin and several most popular altcoins to their clients.
Cryptocurrency trading platform features
Different cryptocurrency platforms offer different conditions to traders. However, there are some common features that one can find almost in every exchange. They are the following:
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Sign up procedure
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Verification
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Trading platform
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Deposit/withdrawal fees, inner commissions
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Security, wallets
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Support service
Sign up procedure
Before you can deal with one or another cryptocurrency trading platform, you need to sign up there. This procedure is similar for almost all crypto trading platforms, but may slightly vary. The standard registration requires traders to provide an email address (sometimes they also asked to provide a platform with some additional data including first and last name).
Email verification is another step during the sign-up procedure. Once you write your email, online service sends a special letter with a confirmation link to your address. You need to click on it in order to finish email verification.
Forex brokers have a much more difficult sign-up procedure, which includes not only email but also a first and last name, phone number, country of residence, current address etc.
Cryptocurrency trading platform verification procedure
Nowadays almost all exchanges require verification to be done. This is an important step as you will have some limitations without verification. Some exchanges allow withdrawing just a couple of Bitcoins for users who have an account but still need to verify it.
How to do it? You need first to offer more personal information to cryptocurrency trading platform. The next step will be to provide a trading place with the scan copies of your id documents and papers confirming your current address. There are some quality requirements for those copies and it is better to learn them before sending anything as exchange’s security service may deny the documents and you will have to start the verification procedure from the beginning.
Why do exchanges require those papers from traders? They join AML and KYC policies. We think that there will be no cryptocurrency trading platforms who will allow traders to work without verification in future.
As for Forex brokers, verification procedure is necessary there as well. You need to do the same steps in order to abolish all withdrawal and trading limitations. Once you have created your account and passed the verification, you are allowed to start trading. However, before you place your first order, you need to fund your account.
Cryptocurrency trading platform deposit and withdrawal
Trading requires money. Before you start, you need to put some amount into your trading account. Depending on the exchange type, you are allowed to invest in fiat currencies or cryptos. Some cryptocurrency trading platforms allow their clients to fund accounts with traditional currencies such as US dollars or Japanese Yen, for example.
However, there are crypto trading platforms where you can work using cryptos only meaning all other deposit methods are unavailable. If you have nothing except traditional currencies, you need to use a couple of exchanges in this case.
When you fund your trading account with fiat money, you use traditional credit or debit cards, for example. Some cryptocurrency trading platforms offer electronic payment systems like PayPal, Neteller, Skrill and the others.
Forex brokers offer more deposit and withdrawal methods and all of them have both fiat and cryptocurrencies. However, it is to mention that those companies allow traders to use fewer cryptos than exchanges.
Cryptocurrency trading platforms
The next big thing to describe is crypto platforms. They may vary from exchange to exchange as they all offer different functionality. Some online services provide traders with minimum features and rather simple charts that do not allow clients to conduct serious technical researches.
The others offer cryptocurrency trading platforms with many serious analysis tools including indicators. One of the most popular nowadays is tradingview chart, which is the most functional one.
Besides charts, crypto trading platforms provide traders with other important tools including order books, order window and the others.
It is to mention that the most popular exchanges nowadays try to provide traders with the most necessary trading tools as they offer different orders type to meet all investors requirements. You have an opportunity to buy or sell an asset at market price or place a limit one and choose your own price.
Why is it necessary sometimes to use limit orders? Let’s suppose you want to buy BTC/USD. The current asset’s price is $6,000. However, you think that the currency pair is able to decline towards $5,800 before going upwards. You can wait until this happens and open your positions manually or simply place a limit order at $5,800 and forget about charts until this order triggers.
Eric EisslerAs for Forex brokers, they offer more functionality to traders as all of them have professional trading platforms with a huge number of indicators and other important analysis tools. Besides, you have plenty of options on how to place orders and to limit your risks.
Cryptocurrency trading platform fees
When trading cryptos on exchanges, you need to pay attention to fees. Every online service takes commissions depending on traders’ activities. There are deposit and withdrawal fees along with trading ones.
Some exchanges take commissions from takers and makers separately. Other online services have the same fee for both types of market participants. How does this work? Let’s say you have earned $200 in a trade. This is your total profit, but this does not mean that all this money will be yours. Let’s suppose exchange commission is 0.35 percent. This means that you have to pay less than $2 as commission.
Why do crypto trading platforms take fees from traders? Deposit and withdrawal commissions depend on payment systems fees. As for trading commissions, they are the “salary” of online service.
Security
Almost all cryptocurrency trading platforms have their Achilles’ heel as they are vulnerable to hackers’ attacks. The history of exchanges is full of those dramatic moments when traders were losing their money because of such attacks.
Nowadays cryptocurrency trading platforms offer a high level of security as they use online and offline wallets, different types of authorization methods etc. Those tools help online services to provide clients with the most effective defense ever. However, when you deal with this or that exchange, you need to pay attention at their security level separately as they are not similar.
What is the most vulnerable point in the security of every service? Experience has shown that hackers steal money from online wallets. This made exchanges to change their funds holding strategy and start to use offline storages in order to significantly improve the security level.
Forex brokers have higher security level as they hold traders’ money on special banking accounts and hackers have no chance to reach them. However, as for cryptocurrency trading, some Forex broker work with the same crypto wallets as exchanges do. FX brokers use the best experience in this industry and hold about 90 percent of traders funds offline.
Alex DovbnyaCryptocurrency trading platform and support service
Support service is an important part of every crypto trading platform as it helps traders to deal with different types of issues that may occur during traders’ and investors’ everyday routine. Some online services offer 24/7 support to their clients including online charts. The others prefer to contact their clients via tickets.
How to choose cryptocurrency trading platform?
There are several aspects to pay attention to before you choose your cryptocurrency trading platform. We have listed the most important ones:
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Exchange or broker reputation. It is not a secret that there are good and bad online services. Before you take the final decision, you need to look through special forums and websites in order to find comments on this or that exchange or Forex broker.
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Fees. Traders always ask about service commissions before they start trading. The less the fees are, the more profit investor will put into his pocket. However, some popular and liquid online services take more commissions from their clients.
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Payment methods. Some cryptocurrency trading platforms allow their clients to deposit with cryptos only. The others offer different ways to fund trading accounts including electronic systems such as PayPal, Skrill etc.
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Verification procedure. Most of the exchanges and all Forex brokers require verification from their clients. There are few online services that allow a user to hold their privacy. However, the tendency shows that all exchanges will require verification to be done in the nearest future.
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Liquidity and exchange rates. When a trader has finally found a reliable exchange, he or she has also paid attention to the liquidity of cryptocurrency trading platform and exchange rates. The more liquid the trading place is; the more likely investor will find better prices.
Denys Serhiichuk
Tomiwabold Olajide
Dan Burgin
Alex Dovbnya
Vladislav Sopov