The stupendous growth of Bitcoin has forced every trader to take notice. By looking at Bitcoin’s price history, you will notice it has jumped from $1 in April of 2011 to $40,000 in January of 2021. So it shouldn’t be a surprise when you find more and more traders joining the cryptocurrency trading bandwagon.
If you’re one of them, you’ll need to sign up for a cryptocurrency exchange like FTX Exchange. But how do you select the right exchange when there are over 190 exchanges in operation? This article will answer that question.
Location Matters More than You Think
Cryptocurrency exchanges don’t have a physical location like NYSE or LSE. They operate over the internet using real-time price charts.
Traders can join and then buy and sell Bitcoins and Altcoins. So you must be thinking that location would matter the least. But in fact, location is perhaps the first factor you should look at.
Expert traders will advise you that you should sign up for an exchange that’s registered in your country. So if you’re in the United States, you should prefer US-based exchanges over non-US exchanges.
And the reason is security and safety. You don’t want your funds to flow into an account where there’s no security. The exchange could shut down the next day, and you’ll lose all the money in the process.
So you should always visit the About Us and Contact Us pages to check where the exchange is based.
Check and Read Policies
Exchanges come in various shapes and sizes. Not all of them are created equal. Some exchanges accept currency in exchange for Bitcoins. So you’ll be able to start trading Bitcoins without the need for a Bitcoin wallet. But other exchanges do not allow fiat currency transactions. So create a Bitcoin wallet, fill up digital tokens, and then transfer them over to the exchange.
Besides that, each exchange has its policy in place. While most of the policies are lengthy, you should take the time to read through them. After all, you’ll be investing money into it. Among other things, you should check if they meet the local regulatory standards or not.
Leverage and Future Trading
Not all exchanges offer the same leverage. And yet, leverage is among the things that have the most impact on your trade. Leverage is the amount of money (or Bitcoins, in this context) you can trade by borrowing from the exchange. So if the leverage is 1:100, you can trade up to a size of 100 Bitcoins by investing 1 Bitcoin from your end. The higher the leverage, the riskier is the trade, but so is the profit.
Bitcoin futures trading are growing in popularity, but not all exchanges are offering it at the moment. Future trades are often highly leveraged.
So you need to check the leverage and futures offered by an exchange.
Charts and Tools Availability
If you’re an active day trader, then you should be concerned about the price charts. You’ll find two types of exchanges — the ones that display the price change in real-time on their dashboard. Then some exchanges may show a more detailed chart that allows you to run multiple indicators.
Most day traders prefer to have a detailed chart at their disposal. For long-term traders, they’re satisfied with the real-time price.
Altcoins Availability
Altcoins are all cryptocurrencies other than Bitcoin. These are presented as an alternative to Bitcoin, hence their name Altcoins. Some of the most popular Altcoinsare Ethereum, Bitcoin Cash, Ripple, Litecoin, Lisk, etc.
You can trade Bitcoins with other cryptocurrencies too. So you can select the Bitcoin/Ethereum pair and trade for price changes. It’s similar to currency trading.
At the time of writing, there existed more than 5,000 Altcoins. Some are more volatile than others. The more number of Altcoins you have at the exchange, the more crypto pairs you can trade.
Online Reputation
Finally, you should check how reputed an exchange is online. The crypto community is huge, and users often leave feedback on the platforms they’ve traded with. You can read through the Google reviews or reviews posted at different forums. If the exchange is indulged in any malpractice, users can report the same. Legit exchanges often enjoy a healthy amount of good reviews. Those are the types of exchanges you should trade Bitcoins at.
So when selecting a cryptocurrency exchange to trade at, you should look at both safety and features. Safety always comes first, and you should ensure that the exchange is safe. Popular exchanges like FTX Exchange display their credentials on their homepage and at other places. So look for these things to select the right Bitcoin exchange.
