At the start of blockchain, the virtual coins used to be traded through the OTC market or any dedicated cryptocurrency exchanges. For trading to take place, the seller and buyer would arrange to either purchase or sell the coins directly between them.
As the trading continued and time was passing, then cryptos became famous and were not only known by computer geeks but worldwide. It’s the reason as to why they needed more options and trading tools because they had become speculative assets. Since that time, contracts for difference or termed as CFDs came in handy. This has become the favourite instrument to use for trading everything including soybean a and gold. It has been there for decades and people are trusting its services and in the world, it helps to speculate the cryptocurrency price movements.
Overview of CFDs Fitting In Cryptocurrencies
The CFDs are financial derivatives that are made as to future contract forms. They conclude between a broker and trader whether they settle as cash and not physical assets or goods.
So, the CFD traders don’t trade with underlying assets but they have the right for receiving the difference that is between the cost of the asset currently and it’s value in the future.
When the trader gets it right after the prediction for a specific asset’s future value it’s when they pocket the price difference. So that they can cover the loss, they pay the price difference to an exchanger (broker). The system will work properly for all assets, and that’s where cryptocurrency is included.
However, before you could jump into a random exchange because you have been recommended, there are some factors you have to be cautious about. Finding the best broker to trade cryptocurrency like ETFinance take some effort and time, but it will be worth.
You also have to know the difference between the crypto-to-crypto with crypto-to-flat exchanges. For crypto-to-crypto will be listing cryptocurrency pairs only but for flat-to-crypto exchanges allows you to buy or sell cryptocurrencies with yen, pounds, dollars, euros or other currencies.
Choosing A Cryptocurrency Broker
If you want an exchange, you should have in your mind about the mileage. So, you might be looking for finance one supporting trading pairs, specific altcoins or have additional features like margin trading and not OTC deals.
After the broke ETFinance meets your expectations it’s worth using their services.
If you want to trade safely cryptocurrencies with a broker, consider these characteristics:
In trading, security will be an essential factor that you should consider. If you don’t put it on the first line, you might lose everything.
For an insecure broker, they will steal your funds and any advantage you will have will be worthless. In business, no one will be willing to lose investment money. So, in the aspect, security should be considered.
Here, you have to look at the web address of the broker. For example, avoid a broker whose website address is HTTP connections. The one suitable should start with HTTPS because it’s a safe website.
Moreover, while login, ensure you are using two-factor authentication. It should be only a piece of information that it’s only you who knows.
The other tip to ensure you’re secure is where the customer deposits have to be stored offline.
Besides, when you want to whitelist the IP address it should be possible or withdraw wallet address to ensure you have maximum security.
The customers will feel secure when they have auditing programs helping to monitor exchange activity through SMS or email alerts throughout the day.
- Legal Aspects
The best advice to ensure you’re safe with cryptocurrency trading is using a broker that resides in your country. If you choose the country you live in, it will be easy to comply with the regulatory changes.
Even though, its also possible for you to use exchanges from another country. However, remember that some brokers will be supporting a limited number of nations.
There are some brokerage firms that can ensure their funds, and therefore, when an investor loses their money, they may be reimbursed.
In any investment, finance does everything openly. So, is the broker you’re using revealing the owner or addresses of the headquarters? Transparency in exchanges will make the broker publish the cold storage address or even check the reserves in different ways such as audit information.
You also have to be cautious because most brokers are honeypots for hackers. So, when not trading, ensure you put your cryptocurrencies in your private wallet to avoid theft. The hackers will create elaborate schemes for them to steal from investors.
If the trading volume will be higher, it means there is more liquidity for a specific exchange. Liquidity will make it possible for you to complete transactions fast, easier and not dealing with price volatility.
Besides, also consider whether the cryptocurrency broker is offering “locked-in” pricing. It’s something that will guarantee you the price while transacting even when it doesn’t settle immediately.
However, you should be aware that the liquidity varies with trading pairs. You might find it higher BTC/EUR and it is lower for BTC/GBP. So, the best thing is checking the broker’s exchanges having the highest trading volumes.
You have to compare the fees that the broker is charging. However, it should be less than 1% in every transaction and should be decreasing when the trading volume is increasing.
Besides, withdrawal charges are also essential to consider. There are some brokers who offer unreasonably high charges to withdraw for certain altcoins.
Even deposit fees are something to be concerned about. For many brokerage firms, they will be offering convenient ways of buying cryptocurrencies using debit or credit cards. However, doing such purchases will be coming with a 5% fee or higher.
- User Experience
If you’re an individual caring about anonymity, then you can’t choose an exchanger who will need you to reveal many identities. Besides the interface should also be easier for you to both uses on mobile and desktop devices.
However, also look at the reviews about the broker firm. You will hear what others are recommending.