As retail investors rush to get in on crypto, it’s back to trading fundamentals.
Studies estimate that 1 in 10 people will be investing their stimulus checks in crypto. Which means that there are going to be a huge number of people running towards the crypto space with little idea of what to expect— luckily, that’s exactly what cryptocurrencies were designed for. These tokens were purpose built to allow access to everyone, whether they’re new to trading, or institutional investors. As a retail investor, there are a few things you’ll need to get comfortable with before you invest. Particularly if you want to keep your investment safe and secure.
Understanding the basics of the market is a hugely important part of investing in crypto. The other thing that many investors may not pay attention to initially is how to choose the best crypto trading platform that fits both their needs and their ideologies. This is an often-overlooked part of investing wisely, and something that is suprisingly easy to sort out.
Why Choose a Crypto Trading Platform?
While there are still a few different ways to snag some Bitcoin of your own, crypto trading platforms, and crypto exchanges, still remain by far the most popular. This is largely because they are far more reliable than just about every other option. When choosing a crypto trading platform, you gain access to a high level of security, both when purchasing your coins and when storing them. Not only that, but crypto exchange platforms represent a massive pool of demand. This means that everyone on a crypto trading platform is willing, happily, and looking to engage with crypto– something that you may not find elsewhere.
These exchanges also have access to a large supply of bitcoin– as many who use exchanges are also looking to sell them. Which is how they get names like “exchange” and “trading platform”, because that’s exactly what they do. They facilitate the exchange, or trade, of cryptocurrencies. Because these are spaces where large communities of crypto enthusiasts can co-exist, there are also some other perks to using them. For instance, in certain cases and at certain times, some transactions can be reversed if there is an error. This is something that you won’t find on peer-to-peer networks. The tokens for purchase are also guaranteed. You won’t soon find an exchange that doesn’t produce the tokens you’ve paid for.
What to Look For
When actually heading to choose a crypto trading platform, there are some pretty important things that the one you choose will need to have. There are also some things that you should definitely consider, but aren’t exactly necessary. Choosing a crypto exchange is a pretty highly personal objective. You’ll need to consider how you want to invest, what you want to invest in, and take a close look at your existing ideals towards cryptocurrencies– or the reason behind why you want to invest in crypto at all.
For most investors, answering these three questions will automatically pair down the viable exchanges for you to use.
How to Invest
Are you considering trading in high volumes, or smaller drips and drabs? Are you planning to HODL any bitcoins you buy, or is day-trading or arbitrage more your style? Do you plan on investing in options? How you plan on investing will give you a much better framework for the investment options any given platform must have for you.
What to Invest In
Are you looking to invest in the big names— like Bitcoin and Ethereum— or are you looking to really diversify and explore the ever-growing sea of altcoins? Remember that not all exchanges support all cryptos, so if there is a specific token you’re looking to buy up, you’ll need to make sure your exchange of choice offers it.
Why You Are Investing
Are you looking to create capital? Wanting a solid store of value or to protect your existing assets against currency deflation? Do you need to move money to friends and loved ones across borders? Do you just enjoy the idea of cryptos as a disruptive form of currency? Why you are investing in cryptos will tell you where to invest. This is because certain centralized exchanges will not meet these demands, where in other instances, decentralized exchanges can’t offer the protections you’ll need.
Once you figure out your initial motivation, finding a good exchange platform becomes much easier. Now all you’ll need to focus on for the options you have now are these fundamental attributes:
- Does the platform offer good volume and liquidity?
- Does the platform align with geolocational specific regulations and rules?
- What are their trading fees?
- Are they secure?
The four fundamentals represent the last four applicable questions you’ll need to ask to find that perfect exchange platform. If the platform you’re considering ticks all the 7 boxes, then you’re good to go! Time to get trading.