As a trader, choosing an exchange/platform is a major decision. Your life can change depending on the platform you decide to do business with. When choosing a platform, whether as a crypto trader or forex trader, you need to make sure that your goals align with that platform. And, if you are a fan of software trading, you need to check whether your preferred software is compatible with the platform.
Furthermore, that platform should be able to fulfill your needs as they change along with the market. Every trader knows that there is a better chance of profiting as a trader if you put in the time to filter for the right platform, for instance by using the Exchange Finder or the filters in our Exchange List.
Here is a list of things to know before picking your first platform or switching platform.
This is the most important thing to find out before selecting a platform. A high level of security and a record of accomplishment of securing traders’ investments is non-negotiable. Many platforms make claims of being highly secure on their website. That makes sense. After all, you are not going to hand over money to a platform if they have security issues. Anyone can claim to be secure. To ensure the safety of your funds, check their claims.
2. Transaction cost
People say that two things are sure in life – Death and Taxes. The latter is inevitable if you are a forex or crypto trader. No matter what kind of digital assets you trade, you will always have to pay transaction costs. For every trade, you will have to pay for either the spread or a commission. Therefore, it makes perfect sense to look for the most affordable and cheapest rates. After all, what is the essence of trading if all your profit cover fees or charges? The hard truth is that you may need to give up low transaction fees for reliability. Finding the balance between security and low transaction costs should align with your trading goals.
3. Platforms have struggles like every regular company
Most forex or crypto platform have struggles. These struggles result in a short business lifespan. Not long ago, trading software provider, Trading Technologies (TT), decided to close down its trading platform, TT Crypto. The reason was that it could not attract the number of retail users needed to keep the platform afloat. In total, the crypto trading platform had less than 1,000 users. In the Exchange Graveyard, you can find numerous other exchanges who have been forced to walk down similar routes.
Like every trading platform, they aimed to attract a large retail-oriented customer base. However, that did not happen. TT Crypto could not get its users to use their tools to aid their crypto trading. There could be several reasons for this. Therefore, before you decide on which ship to sail on, make sure it is not the Titanic.
4. Price Manipulation is a thing
Price manipulation is also known as “buy and sell walls.” It is very common in the crypto market. People who are behind it are referred to as whales. Whales are crypto traders who own an absurd amount of digital assets. In crypto trading, price manipulation is the prime cause of the volatility of the crypto markets. New crypto traders often withstand the worst of this activity. Mostly because they or their platforms are unable to read the signs on the wall. Instead, they see it as a favorable price so they rush to buy. This puts pressure on minor investors, who find it hard to enter the market at a specific price range.
On the other hand, the whales who are significant investors can manipulate the market without spending too much money. When the price moves in a whale’s favor, they move their position and shift the price range again.
5. Transaction Speed
Another common complaint of crypto trading is the delays in almost every transaction. Unless you use software trading, platforms are not as fast as you think. Most trading platforms are slow to use, all the way from registration to making a trade. The need to mine a trade before it goes through also raises costs even higher. Add that to the commissions that the platforms need to stay in business and we may have a problem. These issues have been identified as drawbacks to the adoption of digital assets on a larger scale. As more people trade, the platform gets slower. This causes transactions to be stuck in the queue waiting for approval. Slow transaction speed becomes unprofitable for every trader in the end.
These delays also affect the quality of user experience in crypto trading. Your platform must have solutions to combat the problem. Especially as the number of traders on the platform increase.
6. They fuel unrealistic expectations about trading
Trading the forex or crypto is inherently risky. Platforms know this attracts most traders and they may encourage you. As a volatile market can be very profitable, traders are willing to take higher risks. Instant gratification leads new traders to plunge headlong into a market in the hope of profiting.
7. Software trading or algorithmic software trading allows traders to establish specific rules for both trade entries and exits.
Once programmed, software trading strategies can be executed via a computer. Besides, roughly 75% of shares traded on U.S. stock exchanges come from automatic software trading systems. Software trading has many pros and there are cons. You may want to research which system the platform you are considering uses. You need to be sure it aligns with your trading goals.
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