With bitcoin prices stealing the limelight from the digital currency spectrum, traders are chomping at the bit to generate opportunities from cryptocurrencies. Just as you would carefully analyze a platform before you started trading assets such as forex, commodities and indices, it’s important to evaluate a trading platform before you deposit your money when you consider cryptocurrency trading. You should perform some due diligence and find a platform that meets your needs, as well as, allows you to trade in a manner that you are accustomed too.
Let’s start with the basics. You want to find a cryptocurrencies trading platform that provides you with a range of choices. Initially, you might be enticed by the rapid rise in bitcoin, but having access to other cryptocurrencies such as Etherium, Litecoin and Ripple are also important. Each of these cryptocurrencies have a different function and having the ability to trade all of them is important if you seriously plan on trading cryptocurrencies. You might want to trade a pair such as bitcoin versus Litecoin as opposed to looking at each of these cryptocurrencies as a pair against the dollar.
Cryptocurrencies in Multiple Currency Bases
Additionally, it’s important that you find a trading platform that provides access to cryptocurrencies in your base currency or major currencies other than the greenback. You don’t want to have to go through the process of selling your yen for dollars and then purchasing a digital currency. If you plan to trade cryptocurrencies, you should find a reputable trading platform that allows you to trade bitcoin in Euros or Litecoin in yen. This can help you eliminate your currency risk if you are attempting to speculator in just the cryptocurrency.
Margin and Leverage
The volatility in the cryptocurrency space has made it difficult to find a reputable broker that will offer margin and leverage while trading cryptocurrencies. Some of the better brokers are offering margin at 20% which is 5-1. This compares to 100-1 or even 400-1 for standard currencies. You want a broker than will be prudent about the margin they provide, given bitcoin has surged from $1,000 to $19,000 in just 2017.
Most brokers who now offer cryptocurrencies are struggling with the spreads that charge to their clients. Most currency traders are used to very tight spread, either 1-2 pips for the EUR/USD. The volatility in the cryptocurrency space has made this more difficult. Some of the more established platforms such as Coinbase not only provide a bid/offer spread that can range from $100-$200 dollars, but they also charge a 1% commission fee. Look for a broker that provides fixed spread and posts their spreads per cryptocurrency on their web site.
If you are a trader that is on-the-go, look for a trading platform that is web based or has mobile capabilities. You want to be able to exchange your cryptocurrency you want to have a platform that can accommodate your trading needs.
While there are several brokers that offer platforms that allow you to trade cryptocurrencies, its important for you to find one that can meet your trading needs. This includes having cryptocurrencies that are paired in different based currencies such as the Yen and Euro, as well as, margin which can allow you to leverage your cryptocurrency deals.
The difficult thing is not to learn, the difficult thing is to know how to teach.
Editor and coordinator of the free book “La era de las BLOCK punto COM”
CEO of bitcoiner.today