How to choose a proper exchange?

HowToToken Team Staff asked 3 years ago
1 Answers
HowToToken Team Staff answered 3 years ago

There are several factors that you need to have in focus of your attention when choosing a crypto exchange. An article from explains them all.

• Information about geographical location and founders
The location of the exchange dictates the laws it will have to comply with. The majority of the countries doesn’t have any laws related to digital currency, but if and when they start to do it, it could significantly affect user’s ability to use and trade Bitcoin.

For example, China is a bad choice for Western traders because there are additional fees, it’s hard to get verified, and English support often isn’t good enough.

Knowing more about the founders of the exchange can also be a great lead about the exchange reputation. If the founders are anonymous and haven’t provided a proof of reserve like in the case of BTC-e, that’s a good sign to be careful.

• Supported currencies and liquidity
It is important to check that the exchange you prefer offers trading desired cryptocurrency and it can guarantee high enough volume of daily trading. It it does not have necessary trading pair, you cannot trade what you want. Liquidity (Volume) is a significant factor if you want to have an ability to buy and turn your crypto to fiat fast.

• Trading fees
Trading fees is a core of any exchange’s business model. It is typically around 0.2% per one trade, but seriously varies between platforms. Right now lowest fees are offered by Whaleclub, Binance (paid in BNB), Bitfinex.

• Trading options
If you want such options as margin trading, futures or other derivatives trading you should check whether the exchange you are looking at offers it.

• Ease of use
Users who are planning to make the trades on the move should double check does the exchange has a responsive website or Android and iOS apps.

• Customer Support
This can be one crucial factor, especially for the new traders. Many things could go wrong, and having a reliable support team can save a lot of nerves and money.

• User Experience
If the preferred exchange has a lot of complaints about locking people out of their accounts, maybe it’s a good idea to take a look at other options.

• Security
Unfortunately, many Bitcoin exchanges are at the constant risk of hacker’s attacks. The digital currencies are volatile, and an attack can cause the price drop, which can bring profits to some malicious users.

A safe trading platform needs to have:
1) Two-factor authentication
2) Cold storage for the majority of funds
3) PGP encrypted emails
4) Email and SMS alerts
5) 24/7 wallet monitoring
6) Proof of reserve

If all of these conditions are met, the exchange is probably safe for keeping the funds in the wallet. Still, we advise that only the amounts used for trading should be kept on the exchange – the rest should be sent to the user’s private wallet.

Source of info with best exchanges by each factor: