Top Features To Look for in a Crypto Exchange
Choosing a cryptocurrency exchange is one of the biggest decisions you'll make when getting into crypto. According to the latest data, there are around 600 platforms out there that invite people to trade digital assets. However, signing up with the wrong one can cost you high fees or poor security. You may also be missing out on the coins and trading options you really want.
Months of research into exchanges may be required before picking one—reading reviews, comparing fee structures, and assessing reputations. It involves work, but it’s crucial to make sure that your funds will be safe and the desired trading capabilities can be accessed.
On that note, here are the key things any good crypto exchange absolutely must have:
1. Security and insurance
Hacks are inevitable, platforms get compromised, and funds get drained or lost. This was evident in 2022, when USD$ 3.8 billion was stolen from cryptocurrency exchanges. This shows that traders are now the main target of cybercriminals.
When looking for the right crypto exchange, security should be your biggest priority. You don't want to just hand over your assets to some sketchy platform with poor protection. You need to know your crypto is locked down tight.
Excellent security means that the platform uses cold storage to keep the bulk of assets offline and can't be hacked. It also means you must go through two-factor authentication every time you log in, so nobody can just access your account even if they steal your password. Best of all, top exchanges encrypt all your personal data and trade info with top-level cybersecurity protocols.
Moreover, an exchange with rock-solid insurance policies to cover any lost digital cash or coins in worst-case scenarios can be reassuring.
2. Liquidity
With over 9,000 digital coins recorded as of 2023, traders actively buy and sell major coins at any given time.
An exchange with high liquidity, which refers to how active the trading is for different cryptocurrencies, allows you to buy and sell easily without drastically impacting market prices. As a result, the difference between the bid and ask prices will be very narrow. This tight bid-ask spread makes trades more efficient.
Additionally, high liquidity means your larger orders can get filled without moving the market too much. There’s sufficient trading volume to absorb your buy or sell orders seamlessly without causing price slippage against you.
This liquidity is seen among trusted exchange platforms that support a large number of cryptocurrencies for their traders. One excellent example of this is Swyftx. If you want to learn more about how this exchange platform works, its security, fees, customer support and even the pros and cons of trading on Swyftx, you can easily find reviews on the web.
You can also find resources for every other crypto exchange there is. By doing so, you can compare your choices and pick the best exchange for you.
3. User interface
If you are new to crypto trading, having an exchange with an easy-to-use and intuitive user interface (UI) is important. Some trading platforms have interfaces that are too complicated and confusing, which can be intimidating.
A good crypto exchange will have a clean and simple UI design that makes it easy to perform common actions like placing orders, monitoring your open positions, and setting up price alerts.
When you’re first learning technical analysis concepts like reading candlestick charts and order books, a well-designed interface goes a long way. It allows you to focus on understanding the market data rather than struggling to understand how the platform works.
4. Fees
One of the biggest expenses that can eat into the profits of retail crypto investors is the trading fees charged by exchanges. Therefore, you must research and compare the fee structures across different platforms before deciding where to trade.
If you trade on an exchange with high fees for buying, selling, or withdrawing funds, those costs will drain your portfolio over time. On the one hand, an exchange that has a low and competitive fee model, especially for makers who provide liquidity to the order books, will allow you to maximize your returns.
The ideal fee structure has extremely low percentages charged on each trade execution, along with a minimal flat fee if you need to withdraw assets off the exchange's platform.
5. Regulatory compliance
In the early days of crypto, regulatory details may not have mattered as much. But as the industry grew, having an exchange that plays by the rules and has all their legal protocol has become more valuable.
An exchange that’s fully regulated, licensed, and hooked to all the latest AML and KYC protocols for diligent user verification can inspire confidence as a legitimate business where funds are properly protected. Sure, providing ID and getting verified may seem like a hassle. However, dealing with those types of security checks is preferable to having your money tied up on some unregulated platform.
However, you should also be careful about platforms with fake licenses. So, be a responsible trader and be thorough with your research.
6. Customer support
The quality of an exchange's customer support can’t be overstated when selecting a platform. Even the most well-designed trading interface will have occasions where you need expert human assistance and guidance.
You may get stuck trying to set up an advanced order type or run into issues with depositing funds. In these situations, being able to get help from the exchange's support team quickly is invaluable.
The exchange you'll choose must have multiple support channels like live chat, email, and phone. This way, you can get assistance in whatever format is most convenient for you.
Having support representatives who are experts at patiently walking you through procedures step-by-step is especially helpful for more complex crypto trading issues. It saves you from headaches, frustration, and potential financial losses from being unable to execute trades or resolve other issues hampering your trading activities.
7. Trading options
Once you get familiar with the basics of crypto, you may want to explore advanced trading tools and strategies. Hence, an exchange that caters to every experience level is valuable.
For beginners, a clean and simple interface for basic buy/sell orders is helpful. But as you get more sophisticated, taking advantage of margin trading, stop losses, technical charts, and more advanced capabilities is ideal.
So, if you’re new to trading, you can slowly start learning more tested strategies to diversify your trading portfolio. Along with this is a scalable platform that grows with you.
8. Fiat support
While one of the major appeals of cryptocurrency is the ability to operate outside of traditional banking systems, many users still receive a portion of their income in fiat currencies like the U.S. dollar.
An ideal exchange platform enables customers to directly deposit fiat currency from their bank accounts to then purchase cryptocurrencies. It must also allow for the withdrawal of fiat directly back to a checking account when cashing out crypto profits without requiring complicated workarounds.
This seamless integration between fiat and cryptocurrency is highly valuable, especially for users still straddling the line between traditional finance and the cryptocurrency ecosystem as they get started.
9. Reputation
An exchange's reputation and track record mean everything. An exchange that has been an industry pioneer for over five years, surviving crazy market swings and hacks on other platforms while never missing a beat in security, reliability, and customer support inspires trust.
Given the risky nature of crypto, having an exchange that you can trust to treat you and your money right is essential.
In closing
At the end of the day, choosing the right crypto exchange is major. But it's also a decision that's going to keep evolving as the industry shifts and new platforms emerge. So, the best thing to do is to find an exchange that checks all the boxes in terms of security, fees, trading options, and more. Put in the work to get it right initially, but don't be married to any single exchange forever. The right fit today may not be tomorrow. So, always keep an open mind about what's best for your money.
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