The top 10 factors to consider when choosing a crypto exchange to save you money and time
When picking a crypto exchange, there are many things to consider, but for many crypto investors, aspects like liquidity, the convenience of use, and if the exchange is available in your area should probably be top of mind. You might immediately save time and money by taking those things into account.
Users can make trades on the crypto exchange by connecting their wallets or using the exchange’s custodial wallet, which can be accessed using a smartphone app or a web browser. As previously noted, there are factors to consider when choosing a crypto exchange that investors should take into account before deciding which cryptocurrency exchange best suits their trading or investing style. According to what would be the most significant for the typical crypto investor, the following are the top 10 factors to consider when choosing a crypto exchange.
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Jurisdiction
Find out first and foremost if the exchange you’re interested in services residents of the state and nation where you currently reside. If the response is no, you won’t be able to use the exchange in question because there are several restrictions and regulations at work here.
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Usability
How much trading experience do you have? When selecting a crypto exchange, that is a crucial factor.
Exchanges that show order books or have a complicated interface with several charts and other information may frighten newer investors. A newbie-friendly exchange might be the greatest choice in that situation.
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Liquidity
To execute trades at any moment, traders require liquidity. This means that on any given day, a sufficient number of orders must flow through an exchange’s order books. When there is a lot of volatility, as occurs frequently in the crypto markets, liquidity is also crucial. Less liquidity has the potential to make volatility worse and cause sharp price swings.
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Asset Selection
Generally speaking, coins with bigger market caps are more likely to be traded on well-known exchanges. Investors seeking rarer, less popular coins may need to hunt for smaller exchanges. Have a wishlist on hand and do some research to discover what is available as that might require it.
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Safety
As several exchanges have experienced security concerns recently, it should go without saying that you should prioritize security while selecting an exchange.
Keeping coins in exchange is putting your money in the hands of another person. Investors typically walk away empty-handed if the exchange is hacked or if a worker steals coins. And yes, it is feasible!
Most exchanges have a section of their websites dedicated to explaining their security procedures.
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Popularity
Many individuals read restaurant reviews to guide their decision when deciding which one to visit on the weekend. Those who are browsing cryptocurrency exchange websites might think of doing the same. Search for “XYZ crypto exchange reviews” to learn more about what former and current users of a specific exchange have to say about it.
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Trading Charges
When buying cryptocurrencies, fees can constitute a hidden expense. Exchanges generate revenue by charging fees on the majority of or all transactions. Be sure you comprehend the fees associated with any cryptocurrency trade.
Similar to how ETH is the native token for the Ethereum blockchain, several exchanges have their own native “exchange tokens.” These tokens are produced by the exchanges, which frequently use them to offer holders reduced trading fees.
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Insurance
Several exchanges offer partial or full user fund insurance. Investors who don’t like the concept of entrusting their money to a corporation they don’t know may find this to be a compelling selling factor. If something disastrous occurs, an exchange that offers insurance could protect investors from damages (like a hack or employee theft).
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Technology Infrastructure
Developers create matching engines to connect buyers and sellers, aiming to provide exchange users with a simple ordering process. An exchange can match orders even during periods of high volume and volatility thanks to a good matching engine.
One component of the infrastructure required to develop new trading pairs and order types that enable the exchange to better serve its consumers is a good matching engine.
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Transparency
“Transparency” in the context of cryptocurrency exchanges refers to how open the exchange discloses its fee structure, the length of time it takes to execute trades and transactions, the legal frameworks in which it conducts business, and, probably most crucially, how secure it is.
If a conversation is evasive while addressing certain issues, it may show a lack of honesty and raise questions. Investors and dealers should take transparency seriously given the prevalence of frauds and hacks in the cryptocurrency industry.
