How to choose a cryptocurrency exchange?

1. Why is choosing the right exchange important?

Everyone who plunges into the world of digital currencies, sooner or later faces the need to choose an exchange. There are a huge number of cryptocurrency exchanges, and each one has its own advantages and disadvantages. Thus, some trading platforms are distinguished by a large selection of currency pairs, others – a convenient interface, some – expanded functionality and many tools for technical and graphical analysis, the fourth – the fastest adding new tokens immediately after the ICO, the fifth offer advanced security settings, etc.

In most cases, crypto-enthusiasts do not limit themselves to just one trading floor. For example, one exchange is used for day-to-day trading of highly liquid assets, another for trading high-risk altcoins, the third for buying new crypto-tokens “for the long term”, and the fourth for buying or selling crypto-tokens not represented on the other three platforms, etc. There can be many options here.

Do not forget that when choosing an exchange, the trader has to entrust the funds to a third party. Decentralized exchanges, which give full control over the private key and, consequently, the user’s funds, are still only at an early stage of development. Thus, this brief guide will talk about the criteria for choosing “traditional” or centralized cryptocurrency exchanges.

2. What criteria should be used when choosing an exchange?

There are quite a few exchanges, and the choice is an individual matter. Nevertheless, the main criteria you should pay attention to when choosing a marketplace are as follows:

  • reputation (before depositing funds in an unfamiliar exchange, it is better to read reviews about it on forums such as bitcointalk or Reddit);
  • commission (each time you buy and/or sell digital currency, the user pays the exchange a commission; it may vary from site to site, but is usually in the range of 0.1-0.25%);
  • the number of trading pairs (some users prefer to trade high-liquid cryptocurrencies from the “top 10”, while others prefer volatile and less liquid altcoins);
  • liquidity (in many respects this parameter depends on daily trading volume; if the market is liquid, there will be buyers and sellers in the market every second, and the chart of Japanese candlesticks will be smooth, without frequent “spikes”);
  • payment options (some exchanges support multiple payment methods, including bank transfers, while others only allow deposit and withdrawal of funds in cryptocurrency);
  • user verification requirements (some exchanges like Poloniex and Bittrex have quite strict requirements; others (like Binance) allow unverified clients to trade as well, but with a certain daily turnover limit.
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Other criteria for choosing an exchange include:

  • the country where the trading site is based (for example, Japanese and South Korean exchanges may “not allow” users from other countries);
  • convenience of the user interface;
  • availability of various tools for technical and graphical analysis;
  • availability of convenient statistics on operations;
  • possibility of margin trading (and, as a consequence, the possibility of receiving a passive income from lending to other exchange members) etc.

3. They say that the Poloniex exchange is popular. Is this true?

This crypto exchange is indeed quite popular and quite suitable for both beginners and seasoned traders. It was founded not so long ago – in 2014, but thanks to its user-friendly interface, wide range of altcoins and prompt addition of new tokens, Poloniex managed to take the leading position in terms of daily trading turnover at the time.

At the moment, about 100 different crypto-assets and four types of tokens (BTC \ETH \XMR \USDT) are listed on the exchange. The platform can operate in three main modes:

  • Exchange – spot trading (without leverage);
  • Margin Trading – trading with leverage (up to 2.5x);
  • Lending – mode, where you can credit other exchange members trading with leverage.

For each of the modes there is a convenient feature to analyze the profits and/or losses, in the context of each currency pair. These analysis tools are located in the My trade history & analysis section.

Charts are equipped with the minimum set of analysis tools, which includes moving averages (SMA and EMA), Bollinger Bands and Fibonacci levels. Also on Poloniex there is a possibility to create pending orders (Buy Stop, Buy Limit, Sell Stop, Sell Limit).

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There is a mobile version of the Poloniex exchange, as well as applications for Android and iOS. At the end of last year, the exchange introduced mandatory verification of user accounts.

4. Where else are a lot of altcoins traded?

Bittrex is a veritable “abode of altcoins” (there are more than 280 of them). Largely due to the avalanche-like demand for alternative digital coins to bitcoin, Bittrex was at one time consistently among the top 10 cryptocurrency platforms in terms of daily trading volume and even took the leading position.

Bittrex has somewhat less user-friendly interface if compared to Poloniex. On the other hand, the charts are equipped with many technical and graphical analysis tools.

Verification on the exchange is required. Trading commissions are 0.25%.

In general, the interface of Bittrex is quite convenient and thoughtful, there are various security settings. In May 2018, the exchange added support for the fiat dollar, but the option is still only available to customers from some U.S. states.

5. What if I want to trade the most liquid assets?

Then you should go to Bitfinex, where mainly the most liquid cryptocurrencies from the “first echelon” of CoinMarketCap are represented. Undeniable advantages of exchange: professional charts from TradingView service, wide opportunities for statistical analysis of user activity and a lot of security settings, notifications and interface.

Bitfinex supports fiat currencies, the “Financing” mode is implemented (analogue of Lending on Poloniex exchange), which allows to receive passive income from lending to other users, trading on this site with a leverage. The exchange supports different types of orders, including stop-limit, trailing stop, Fill or Kill, etc.

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Bitfinex’s reputation is not in doubt, especially after the exchange repaid all debts to users after the 2016 hack.

From the disadvantages of the trading platform it is possible to note a little difficult for perception interface, which may seem to the beginners overloaded by all intricate “chips”. Nevertheless, the exchange deserves attention, especially among crypto-enthusiasts with a solid capital, who prefer highly liquid instruments and a thorough approach to technical analysis.

6. What about Binance? Many people talk about this exchange

This trading floor was created relatively recently, but it steadily occupies the leading positions by the daily volume of trades. On Binance there is a set of altcoins (more than 300), the list of supported coins is constantly supplemented.

The interface of exchanger is pretty convenient and not overloaded with elements, but there are many different security settings.

Also, this exchange has its own token – Binance Coin (BNB), which allows you to save on trading commissions. In April 2018, the trading platform added the ability to convert small balances (‘Convert to BNB’) into its own tokens.

Binance is popular among beginners and professionals alike.

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