Picking a Crypto Exchange: The Best Platforms for Trading Crypto
Selecting a crypto exchange is crucial for anyone investing in digital assets. However, it’s important to understand that there’s no one-size-fits-all solution. Each investor chooses a platform based on their own needs and preferences.
When picking an exchange, you should focus on the factors that matter most to you. For some, this might be a user-friendly interface; for others, it might be a wide range of trading tools or specific crypto pairs. Some prioritize low fees or high liquidity.
In this article, we’ll explore critical parameters that will help you weed out unreliable platforms and make an informed choice. We’ll also suggest three exchanges that are worth considering and suitable for different types of users.
If you’re getting into crypto and want to make your first purchase, we recommend checking out Bybit. Our previous article, “How to Buy Crypto: A Step-by-Step Guide,” provided a detailed guide on using this platform.
What to Consider When Choosing an Exchange?
Legal Aspects
When choosing a crypto exchange, it’s crucial to consider the legal landscape, as crypto regulations vary significantly from country to country. The last thing you want is to have your investment account frozen, followed by a lengthy back-and-forth with customer support.
To minimize risks, we recommend you choose an exchange with an official presence in your country as your primary platform. For instance, Coinbase is the go-to exchange for U.S. residents, while Asian countries tend to favor HTX and Gate. This local presence provides extra support and protection for users in your region. Binance, on the other hand, prohibits EU residents from using USDT for transactions due to the recently implemented MiCA legislation.
It’s important to understand that even if restrictions are imposed, all top-tier exchanges can entirely withdraw your funds. It means your assets won’t be locked up, and you can transfer them to another platform or your wallet.
Remember, staying compliant with local laws keeps you out of trouble and ensures a smoother, more secure trading experience. Always do your homework on the legal status of crypto in your country before diving in.
Liquidity: The Key to Effective Trading
Liquidity is one of the most important factors when choosing a crypto exchange. It determines how easily and quickly you can buy or sell assets without significantly affecting their price.
On exchanges with high liquidity, you can make trades with minimal losses on the spread — the difference between buy and sell prices. Moreover, high liquidity makes it harder to manipulate asset prices and makes trading fairer and more predictable.
Exchanges are aware of the importance of this indicator for traders, and some try to inflate trading volumes artificially. However, experienced investors already know where there’s excellent liquidity, and it’s just an illusion.
To assess exchange liquidity, you can use CoinMarketCap’s ranking. It’s worth noting that this platform was acquired by Binance a few years ago, but overall, the top list reflects the accurate picture.
According to this data and trader experience, the top three in terms of liquidity are Binance, OKX, and Coinbase. We recommend considering these exchanges for trading.
Availability of Trading Pairs
When choosing an exchange, ensuring that the crypto you’re interested in is available for trading is essential. Not all tokens are present on every platform, as listing requires passing a thorough selection process. This process is rigorous on top exchanges, which serves as additional protection for investors against dubious projects.
A good indicator of a token’s reliability is its presence on at least two leading exchanges (Binance, OKX, Coinbase, Bybit). If a coin has yet to be listed on at least two of these platforms, it’s worth more critically evaluating the quality of the project behind it.
You can check the availability of a token on various exchanges at CoinMarketCap. Find the crypto you’re interested in and scroll down the page to the list of exchanges where it’s traded.
It’s also essential to decide on the type of trading. You can choose between spot trading, where you buy and store coins, and futures trading, which allows you to trade with leverage without owning the asset. Note that a token may be available for one type of trading but not another.
So, the algorithm for choosing an exchange based on the availability of trading pairs looks like this:
- Choose the token you’re interested in.
- Check its availability on leading exchanges.
- Make sure it’s available for the desired type of trading (spot or futures).
- Choose the most suitable exchange from the available options.
Following these steps, you can choose an exchange that best suits your investment goals.
Additional Earnings: How to Make Your Crypto Work for You
One of the advantages of crypto is the ability to earn additional income even from funds already invested in assets. Let’s look at the main ways to increase profits from your crypto assets.
Most exchanges offer an Earn platform that allows you to “stake” tokens for additional returns. However, remember: high percentages are often provided on volatile tokens, the price of which can change sharply. Therefore, don’t buy coins solely for high interest rates. Nevertheless, evaluating the potential returns from staking on different exchanges is applicable before purchasing crypto.
Pay attention to launchpads and launchpools — platforms for launching new projects. Exchanges often offer to stake certain coins for a short period to participate in these events, which can bring additional income. For example, Binance uses BNB, and Bybit uses MNT for their launchpads. If you invest in these tokens, keep them on their “native” exchange for maximum benefit.
Participation in launchpads is also possible with stablecoins, but the returns are lower due to lower risk. OKX, in turn, launches tokens with participation through ETH and BTC, which makes this exchange attractive for holders of these cryptos.
It’s also helpful to keep an eye on exchange promotions. Often, they involve trading a specific token in a given period. Having funds in the exchange, you can make several trades according to the promotion conditions and get a chance at a reward.
Choosing a Crypto Exchange: Key Takeaways
Choosing a reliable crypto exchange is crucial for successful trading and working with crypto. When deciding, consider many factors: the exchange’s reputation, security level, liquidity, variety of trading pairs, fees, and interface convenience.
Remember that the crypto market is dynamic, and exchanges are constantly evolving. Regularly check the relevance of information about your chosen platform and be ready to adapt to changes.
Despite the convenience of centralized exchanges, always remember basic security principles. Use strong passwords and two-factor authentication, and keep only the funds you need for active trading on the exchange.
We recommend distributing funds between several top exchanges for maximum effectiveness in investing. Regularly check the promotions, launchpads, and Earn sections on each platform. This approach will allow you to take advantage of all the opportunities for additional earnings provided by various exchanges.
Ultimately, the right choice of exchange can significantly improve your experience with crypto, minimize risks, and maximize opportunities. Approach this decision responsibly, considering your individual needs and goals in digital assets.
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