At the beginning of 2022, digital assets were not only a means of payment but also an investment instrument. Cryptocurrency can be traded (traded) or invested in it for a long time. In addition, many exchanges offer digital derivatives – derivative contracts such as futures and perpetual options. A novice user needs to choose where to trade cryptocurrency and what tools to use in trading. One of the classic decentralized (DEX) platforms is suitable for this purpose.
What is a cryptocurrency exchange
This term refers to Internet platforms created for trading digital assets. At the beginning of 2022, crypto exchanges accounted for the largest part of the trading turnover. Such platforms appeared after the release of Bitcoin and quickly increased the volume of transactions.
A cryptocurrency trading platform is an intermediary between the cryptocurrency market and its participants. Brokers provide clients with trading terminals and access to various types of trading. This list contains:
- Spot operations. The term means direct trading of cryptocurrencies with immediate payment for executed orders.
- Futures. A type of derivative contract that provides for the obligation of the parties to settle after a certain time. Futures quotes are provided by the current market (spot) price of the underlying assets. Contract holders assume the risks of changes in prices of underlying instruments.
- Transactions with leverage (leverage). On most exchanges, this way of earning is called margin trading. Leverage means a temporary loan of money from a crypto exchange secured by a deposit. This tool allows you to increase the purchasing power of the investor. For example, a platform user can borrow $10,000 to make profitable trades against $1,000.
Criteria for choosing a cryptocurrency exchange
Traders’ assessments of trading platforms may vary. Some crypto exchanges specialize in spot transactions, while others provide access to the derivatives market. Commissions, registration rules, and the list of trading pairs differ. Basically, the choice of exchange is influenced by the following criteria:
- The number of available trading pairs.
- Ability to use fiat.
- Transaction fees.
- Average daily trading volume.
- Terminal convenience.
- Technical support hours.
- Number of additional investments and other instruments.
- Site rating.
- Feedback from other customers.
Convenient trading platform
Investments and trading should not cause discomfort. To exclude it, it is important to look for a cryptocurrency trading platform with a convenient terminal. The interface should be intuitive and easy to use. An additional advantage is the presence of 2 themes: light and dark. The latter reduces eye strain when working at night.
Additional trading opportunities
Almost all cryptocurrency exchanges provide clients with access to the spot market. But in the field of digital assets, there are many other investment vehicles, for example:
- Crypto lending.
- Options (a type of derivatives).
- Swaps (derivatives).
- NFTs (non-fungible tokens).
A variety of tools for earning makes it possible to diversify (reduce) risks.