6 Tips For Choosing The Best Crypto Exchange For Day Trading – Cryptocurrency has risen in popularity in recent years, with approximately 295 million crypto users worldwide. One reason for this popularity is that it removes the middlemen—i.e., traditional financial institutions like banks. You can even use crypto to make payments using your mobile phone and without a bank account. But the more popular reason for the rise of cryptocurrencies is that it requires minimum investment to get started.
However, before you start investing in cryptocurrencies, you must select a crypto exchange. These exchanges are platforms on which you can buy and sell cryptocurrency. There are various crypto exchanges available today, nearly 600 cryptocurrency exchanges worldwide according to Forbes magazine. Thus, you need to be keen when choosing the best one.
Fortunately, you can visit websites that review these crypto exchanges. That way, choosing a crypto exchange doesn’t have to be too stressful for you. For people living in Australia (other countries can also check these exchanges), Crypto Exchanges Australia reviewed them all. The website provides in-depth reviews on crypto exchanges and even highlights which exchanges are perfect for beginners.
So you’ve started your foray into the world of crypto trading. Here are six tips to help you choose the best crypto exchange for day trading:
Tips For Choosing The Best Crypto Exchange For Day Trading
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Compare the Fees
All crypto exchanges charge fees, but the rates vary widely. Most platforms use a tiered maker-and-taker scheme to schedule their costs. The maker is the one who sets up a market on the exchange by selling cryptocurrencies. On the other hand, the taker takes it off the market by buying it. As you might expect, the best crypto exchanges for day trading are those with low fees. Lower fees let you keep the bulk of your money in your pockets instead of spending it on transactions.
The first thing to consider is the charges for buying and selling crypto. Moreover, check whether the exchange charges an additional deposit, transaction, or withdrawal fee. You must also compare the various deposit and withdrawal methods and the differences in the rates.
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Confirm the Security Standards
The most crucial thing you’d want to do when picking the best crypto exchange for day trading is to be cautious. Scammers and fraudsters are out there, and they can loot your hard-earned money, affecting your investment in the worst ways possible.
According to a report released by the Federal Trade Commission (FTC), over 46,000 people reported losing more than $1 billion in crypto to scams from the beginning of 2021. These losses were 60 times more than the losses in 2018, with a median individual loss of $2,600. For this reason, ensure the crypto exchange you choose is highly secure.
Check if the crypto exchange you’re looking to use has cutting-edge technology like Cross-Site Scripting (XSS), DDoS protection, cross-site request forgeries (CSRF) protection, HTTP public key pinning, clickjacking attack, X-Frame-Options, or cold storage. Besides, trustworthy exchanges have a broad social media presence and websites. They also have set up a history among researchers and the crypto world. Another thing you can look into is where the exchange is based and its physical address. This kind of transparency is a sure sign of authenticity.
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Check the Deposit and Withdrawal Limits
Since you’ll be trading daily, you need to choose an exchange with limits that don’t inconvenience you. Check the maximum and minimum amounts you can deposit or withdraw from your account. A higher-than-average minimum deposit requirement may lock you out if you don’t have enough funds at the moment. Lower minimum deposit thresholds are usually favorable to many.
Likewise, a low minimum withdrawal limit lets you withdraw smaller amounts as soon as you profit instead of waiting for the wins to accumulate significantly before you can withdraw. On the other hand, high maximum withdrawal limits favor you if your account size is big and you’re making a lot of profit daily.
Remember to check the deposit and withdrawal options. Ensure the exchange you pick supports the methods you’d want to use, whether bank wire transfers, credit cards, or mobile payments. You can go for platforms with more options as they offer more flexibility in funding your account. Besides that, examine the processing time. That’s how long it might take for the exchange to complete your deposit or process your withdrawal requests.
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Choose Regulated Exchanges
Regulation by financial conduct authorities safeguards your investment in several ways. Remember that crypto exchanges are susceptible to hacks. They’re more popular with hackers because of the considerable sums of money involved.
According to data NBC News found, there were over 20 hacks in 2021. Cybercriminals stole at least USD$10 million in digital currency from crypto exchanges or projects. In at least six cases, hackers siphoned more than USD$100 million. Therefore, before investing in any crypto exchange, consider researching its history of cyberattacks or theft.
Suppose you live in Australia and want to start trading cryptocurrencies. A legitimate exchange in Australia must be registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC). Also, most platforms offer two-feature authentication, but you can go for those with additional security features like biometrics login.
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Check the Supported Cryptocurrencies
As of 2022, there are approximately 10,000 cryptocurrencies in the market. Every crypto exchange supports different currencies with unique trading practices. Some support only a few coins, while others deal with numerous currencies. Whether you’re a seasoned trader or just starting, it’s best to go for exchanges that support multiple cryptocurrencies. That way, you can diversify your investments, lower risks, and optimize profits.
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Ensure There is High Liquidity
Liquidity is the ease with which you can convert a coin to cash or other coins without influencing its value. You need liquidity to trade at any given time of the day. It implies that an exchange must have large volumes of orders every single day. A crypto exchange with good liquidity enables you to trade instantly and seamlessly.
High liquidity plays a crucial role in the crypto market. It enhances stability and prevents traders and exchanges from sharp market fluctuations. Here are other advantages of high liquidity:
- Superior and fair prices: The large number of buyers and sellers in a liquid market leads to a reasonable price in the crypto market. Investment with high trading activity enables sellers to sell it at a competitive cost, and buyers stick to it. This activity creates a stable equilibrium, which is essential for a good market.
- Accurate technical evaluation: High liquidity provides a vast volume of data that can be used for precise calculations. That way, you know when to buy and sell exactly.
- Faster transactions: A liquid market speeds up and streamlines the process of buying and selling cryptocurrencies. The massive number of traders enables buy-and-sell orders to be fulfilled much more rapidly, which means you can enter or exit a trade instantly.
Conclusion
Day trading is one of the best strategies for trading cryptocurrencies. It can earn you enormous and quick profits if you do it well. Choosing the best crypto exchange is an excellent way to ensure you trade without much hassle.
Ideally, you need a platform with a fast transaction time to ensure you can deposit or withdraw your coins within a short time. Also, a platform with low fees is ideal as it ensures you receive maximum returns. Therefore, take your time, research, and select the best crypto exchange to start your crypto trading journey today.