As retail investors rush to get into crypto, it’s back to trading fundamentals.
Studies estimate that one in 10 people will invest their stimulus checks in crypto. Which means there will be a large number of people running into the crypto space with little idea of what to expect – thankfully, that is exactly what cryptocurrencies were designed for. These tokens have been specially designed to allow access to everyone, whether they are new to trading or institutional investors. As a retail investor, there are a few things you should familiarize yourself with before investing. Especially if you want to keep your investment safe and secure.
Understanding the basics of the market is an extremely important part of investing in crypto. The other thing that many investors may not initially pay attention to is how to choose the best crypto trading platform that suits both their needs and their ideologies. It’s an often overlooked part of wise investing, and something that’s surprisingly easy to sort out.
Why choose a crypto trading platform?
Although there are still several ways to acquire Bitcoin, crypto trading platforms and crypto exchanges remain by far the most popular. This is largely because they are much more reliable than almost any other option. By choosing a crypto trading platform, you access a high level of security, both when buying your coins and when storing them. Not only that, but crypto exchange platforms represent a massive demand pool. This means everyone on a crypto trading platform is willing, happy, and looking to engage with crypto – something you might not find elsewhere.
These exchanges also have access to a large amount of bitcoins, as many who use the exchanges are also looking to sell them. That’s 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 other benefits to using them as well. For example, in certain cases and at certain times, certain transactions may be canceled in the event of an error. This is something you won’t find on peer-to-peer networks. Purchased tokens are also guaranteed. You won’t find an exchange anytime soon that doesn’t produce the tokens you paid for.
What to look for
When heading towards choosing a crypto trading platform, there are some pretty important things that which one you will choose need have. There are also some things you should definitely consider, but aren’t really necessary. Choosing a crypto exchange is a fairly personal goal. You will need to think about how you want to invest, what you want to invest in, and take a hard look at your existing ideals towards cryptocurrencies – or why you want to invest in crypto.
For most investors, answering these three questions will automatically associate viable exchanges for you to use.
How to invest
Do you plan to trade high volumes or smaller drops and drops? Do you plan to HODL all the bitcoins you buy, or is day-trading or arbitrage more your style? Are you considering investing in options? How you plan to invest will give you a much better framework for investment options than 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 really looking to branch out and explore the ever-growing sea of altcoins? Remember that not all exchanges support all cryptos, so if there is a specific token you are looking to buy, you will need to make sure your exchange of choice offers it.
why you invest
Are you looking to create capital? Do you want a solid store of value or protect your existing assets against currency deflation? Do you need to transfer money to friends and relatives across borders? Do you just like the idea of cryptos as a form of disruptive currency? Why you invest in cryptos will tell you where to invest. This is because some centralized exchanges will not meet these requirements, while in other cases decentralized exchanges may not offer the protections you will need.
Once you have determined your initial motivation, finding a good trading platform becomes much easier. Now, all you will 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 comply with regulations and rules specific to geolocation?
- What are their trading fees?
- Are they secure?
The four fundamentals represent the last four applicable questions you will need to ask to find the ideal exchange platform. If the platform you are considering ticks all 7 boxes, then you are good to go! It’s time to trade.