Crypto trading platforms have become popular across various global jurisdictions. They help traders and investors easily access the financial market and explore multiple digital tokens. However, navigating the cryptocurrency market has never been easy. There have been witnessed highs and lows, but trading and investing continue through it all. Another common mistake is following your friends’ recommendations rather than sticking to your requirements. Note that a platform can suit one trader but not another. If you prefer a broker, you can test them first via their demo accounts before making a commitment. Plus, start with a small capital to see how things work out before adjusting to a larger amount. Continuous learning is also paramount to ensure you stay abreast with the latest market developments.
To effectively explore this market and maximize potential, investors must be keen on the type of platforms they are using. We have witnessed many beginners make common mistakes when identifying reliable platforms. Therefore, this article highlights what to look for and the common errors to avoid when choosing one.
What Are Crypto Trading Platforms?
Cryptocurrency trading platforms are digital marketplaces that connect crypto buyers and sellers to exchange various tokens for profits. Besides using them to purchase and take ownership of the digital tokens, investors have an opportunity to explore additional instruments. These include stocks, commodities, forex, and more, which are excellent for portfolio diversification.
The best element about using crypto platforms is that they easily connect you to multiple financial instruments. Plus, they are affordable, thus attracting all types of investors. Some crypto platforms also feature quality resources that help with market analysis and skills development. Simply put, these platforms offer the best support that guarantees an exciting experience and increased profit potential.
What to Look for in a Crypto Trading Platform
The development of cryptocurrency platforms has introduced many providers to the market. These include illegitimate ones looking for innocent traders to scam off their hard-earned money. The good news is that you can confirm various elements in a broker to avoid such encounters. Let’s explore the major ones below.
Security
Your safety and that of your funds should be a priority when looking for a crypto platform. With many fraudsters available, confirm a platform’s regulatory status. For instance, Aussies should prioritize those overseen by the Australian Securities and Investment Commission (ASIC). Plus, a good platform should be highly encrypted and allow the use of passwords and biometrics.
Fees
Consider the applicable trading and non-trading charges. Only a broker that aligns with your budget should be considered. Check the minimum deposit requirement, inactivity fees, commissions/spreads, overnight costs, and more. Transparency matters, and there shouldn't be any hidden fees.
Platform Reliability
Settle with a platform that is user-friendly and customizable. Moreover, it should have a fast trade execution speed on desktop and mobile devices. Also, confirm whether it supports users with quality tools for market analysis and skills development. For those new to cryptocurrency trading, check the availability of a demo account, especially if the minimum deposit requirement is high.
Cryptocurrencies and Other Assets Available
If you are looking to invest in Bitcoin, Ethereum, Litecoin, Dogecoin, stablecoins, and more. In this case, the platform you settle with must list them for an exciting experience. The best options also host additional securities for efficient portfolio diversification. They could be other cryptos or asset classes like forex, shares, indices, and more.
Supported Wallet
Consider a crypto trading platform that supports reputable storage like Trezor and MetaMask. You want to be sure that your funds are protected, especially if you are into long-term investment. Leaving your tokens in an exchange is risky, considering many hacking histories. Note that digital wallets come in two forms, inducing software and hardware. Hardware wallets are mostly suitable for long-term investments as they are based offline, away from phishing activities.
Reputation
Conduct the necessary due diligence when it comes to a platform’s reputation. What are other traders saying about their experiences, and will that affect your choice? Legitimate sites like Trustpilot, Google Play, and the App Store will ensure you find the right answers on what to expect.
Types of Crypto Trading Platforms
There are two major types of cryptocurrency trading platforms, including:
Exchanges
A cryptocurrency exchange is an online-based platform or website that directly connects crypto buyers and sellers. They can buy, sell, or trade multiple digital tokens based on the current market prices without setting their own. Some of the cryptos that exchanges list include Bitcoin, Ethereum, likecoin, and more. Note that exchanges come in two forms, including centralized and decentralized. A few examples of crypto exchanges include Binance, Coinbase, Kraken, and more.
Brokers
A broker is also an online platform or website for buying, selling, or trading cryptocurrencies. The difference between brokers and exchanges is that brokers act as intermediaries between crypto investors and the market. They facilitate trades on their clients’ behalf, unlike exchanges that directly connect users.
Additionally, brokers, most of which are listed on BrokerRaters website, are more secure, considering their solid regulatory oversight. While brokers may seem to charge higher fees than exchanges, users benefit from additional elements. These include leverage trading, market analysis tools, professional guidance, and more.
Overall, trading with an exchange or broker both come with its own benefits. You can consider a suitable option based on your individual preference and risk tolerance. For instance, exchanges list numerous cryptos than brokers. On the other hand, brokers host additional asset classes like forex, shares, and more.
Common Mistakes Traders Make When Choosing a Platform
From the content above, it is crucial to avoid making common mistakes if you want to securely invest in cryptos and maximize your potential. One of the areas traders fall short in is trading with unsuitable platforms. Failing to confirm elements like security, fees, performance, and more, can either lead you to scammers' hands or you will have a challenging experience.
