Where’s best to trade Bitcoin and other cryptocurrencies? It’s a great question. If you’re not sure where to start, the above cryptocurrency exchanges are top choices to begin your trading journey. The following comprehensive guide will also give you an insight into choosing the right exchange for you. The right exchange to trade like a boss because no matter whether the market is bull or bear there’s great money to be made as a cryptocurrency trader.
What is a cryptocurrency exchange?
A cryptocurrency exchange is an online platform where you can buy, sell and trade cryptocurrencies.
Some exchanges allow you to exchange through USD, GDP or Euros while others allow trading with cryptos such as Bitcoin (BTC) or Ethereum (ETH).
Platforms cater for the novice right up to the pro-traders. There’s a platform for everyone – no matter your starting level!
Most likely you will need to join a few different exchanges in order to buy and sell the cryptocurrencies you want.
Once your familiar with one it’s like riding a bike: you can jump right onto the next one.
What to look out for before joining a cryptocurrency exchange
Before you dive in and start trading on an exchange, it’s best to do a little homework. Try and review the exchange for the following features:
- Reputation – The best way to find out about an exchange is to find reviews on other reputable websites and from other users. If it’s getting a bashing on Reddit, you have to ask the question why is that the case. Reputation is a great indicator of quality.
- User-friendly trading tools– If you are a newbie, go for exchanges with easy to user interfaces. Binance is always a good bet as there are lots of guides on YouTube and on blogs to get you started. Experienced traders will mostly navigate to the more in-depth technical exchanges.
- Payment methods – What payment methods are available on the exchange? Credit and debit card? PayPal? Wire transfer? Ask yourself what type of payment type you want to use. Purchasing cryptocurrencies with a credit card will always require identity verification. This will incur a premium price. Purchasing cryptocurrency via wire transfer will take longer and so this may rule this out as a mode of funding your trading. It’s no fun waiting for a wire transfer to clear when you itching to get trading.
- Fees – Most exchanges should have fee-related information on their websites. Often these fees can vary significantly between different exchanges. Before joining, make sure you understand deposit, withdrawal and transaction fees.
- Verification requirements – Some exchanges will allow you to remain anonymous, but most of the big players mentioned at the beginning of the post will need some sort of ID verification. Often a driver’s license or passport will do. Although it can seem like a pain, it really is for everyone’s benefit.
- Geographical restrictions – Some exchanges are only open to people from certain countries. You’ll find this out pretty quickly on sign up, but there are so many options available that a suitable alternative can mostly always be found.
- Exchange rate – Different exchanges have different rates. If you are a canny shopper and go to different exchanges, savings can be found. It’s not uncommon for rates to fluctuate up to 10% and even higher in some instances.
- Liquidity – You’ll want to choose exchanges to trade on with high liquidity. The level of liquidity on an exchange affects the ease and speed with which you can complete trades. If there’s a high level of liquidity (high trading volume), then trades should be completed quickly and easily. You can check crypto exchange trading volumes on sites like CoinMarketCap.
How to start trading cryptocurrencies on an exchange
Many of the best cryptocurrency exchanges for trading cryptocurrencies will let you use a credit card or hook up your bank account to buy cryptocurrencies like BTC or ETH.
BTC and ETH are good cryptos to start off with as they are most easily converted into altcoins.
When in doubt, buy Bitcoin.
If you want some free BTC , use this link (while supplies last).
This link takes you to Coinbase where BTC can easily be bought and transferred to the exchange where you want to buy and trade an altcoin.
So how do we know where our favourite altcoins are traded? It’s easy! Simply go to Coinmarketcap and click on the coin you want to buy.
Next, click on the Markets tab for that coin. Here’s where you can get OmiseGO (OMG). The Source column will show you the exchanges where this coin is being traded.
You will notice how many of them are traded against Bitcoin or Ether.
All you have to do now is find the best exchange on the list and create an account. If you can buy BTC or ETH directly on there, then great.
If not, find the BTC receiving address. Copy it. Log back into Coinbase and send the BTC from here into the exchanges BTC receiveing address.
Want to be even more of a trading boss? Then transfer BTC between Coinbase and Coinbase Pro and send from the Pro account to any BTC receiving address for free!
You’re now good to trade!
Using the exchange like a boss
Alright, now it’s finally time to get onto the exchanges and begin making trades like a pro. To help you get started on the exchanges this section will review some of the common features:
On the exchange, the order book is the list of all the orders that are waiting to be filled. When orders are placed that are priced higher or lower than the current price, they are left unfilled and placed on the order book.
As buyers and sellers become more aggressive, they will push the price up or down the order book.
The order book is also known as the market depth and can be used to provide an indication of the liquidity of a cryptocurrency.
Liquidity refers to the ability of a cryptocurrency to bought and sold quickly without affecting the price. The larger the trading volume of a cryptocurrency the higher the liquidity and vice versa.
In terms of liquidity, more liquid cryptocurrencies tend to be preferred by traders because it means when they attempt to exit a position they will not negatively affect the price.
Additionally, more liquid cryptocurrencies are significantly harder to manipulate, making them less likely to fall prey to pump and dump schemes.
If you find an exchange has a bad rep for pump and dump, then it’s best to steer clear.
Using a stop loss
A sell stop loss is placed on top of a cryptocurrency trade that executes a sell order when the cryptocurrency reaches a certain price.
Sell stop losses are placed below the buy-in price and are a great tool for not losing your whole stack. In such a volatile market like cryptocurrencies, a sell stop loss is key because it’s designed to limit your potential loss on an investment. Effectively, you will live to fight another day should everything go South.
Conversely, buy stop losses allow you to collect profits if your cryptocurrency were ever hit a certain price above your buy-in price. They are great for capturing gains in times of volatility.
I’d always recommend having a stop loss crypto trading especially while you are learning the ropes.
Managing loses and securing profits then leads us onto the next learning point: what do I do with all these earnings?
How do you store cryptocurrencies?
When you start to trade cryptocurrencies on exchanges, you will (hopefully) have oodles of profit from bagging some good gains. But where do you store your coins?
You can store them on the exchange, but this is an example of a hot wallet. This isn’t the best place as you don’t own the private keys to them and the risk of the exchange being hacked can’t be ruled out.
Here are your different options:
- Online wallet: The easiest way to store your money and it’s also the least secure. It’s not a good long term storage solution, but it’s fine for funding your trading accounts. Exchanges have their own wallets built in.
- Mobile wallet: You can download a mobile app like Mycelium to store your crypto. It’s more secure than an online wallet. However, if your phone ever breaks or gets hacked, your wallet can be emptied.
- Desktop wallet: Similar to a mobile app, but just for desk top computers.
- Hardware device wallet: These are hardware devices that are built especially for storing cryptocurrency keys. They are safer than the options above. An example would be the ledger Nano S.
- Paper wallet: You can also store your private key on paper. This is the most hacker proof, but it is also the least convenient.
For me, you’re best bet is to use the hot wallets on the exchange and then send your profits back to a Ledger Nano S.
Keep your computer clean and only use the Ledger Nano S when needed.
If you don’t want to part with your hard earned cash so soon, a good desk top wallet will do the job as long as you’re carefully with keeping your information safe.
If you want to find a more detailed review of the best crypto wallets, here’s a really helpful post for further info.
Top tips for success in cryptocurrency trading
- Choose the right exchange for your skill level. All the ones in on the page are great starting points.
- Go steady with your trading. Start small and build up. Everyone loses at some point especially in the beginning so have your stop losses in place and learn from your mistakes.
- Following on from learning from mistakes, keep a journal. If this sounds like a chore, there are websites that will track all of your trading statistics for you. Examples include Tradingdiary Pro or Edgewonk. This really will help.
- Stay safe online and keep your computer clean. Guard your private keys with your life and use 2-factor authentication on your trading accounts.
- Finally, and most important of all, enjoy your trading.
Best cryptocurrency exchanges for trading – wrapping up
If you do decide to join any of the exchanges in this article, on some of them I get paid a small commission from the links that you click through – so I thank you in advance if you do. Happy trading from Crypto Coin Dude.
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