Exchanges are to cryptocurrency trading what brokerages are to stock trading. And just like with brokers, exchanges can vary widely in their features and costs.
At the end of this article, we list five of our favorite cryptocurrency exchanges for trading. But for now, here are a few factors that you’ll want to consider as you compare platforms.
Long-term investors may not be as worried about the fees that they pay for trades. But if you’ll be trading frequently, trade costs become a bigger deal that can make a big difference in how much you make (or lose).
To find the lowest fees, you’ll generally want to look for exchanges that utilize a maker/taker pricing structure. With Coinbase, this means you’ll want to sign up for a Coinbase Pro account which targets active traders as its standard accounts come with a more complicated and higher cost fee structure.
“Maker” orders are trades that don’t receive an immediate match, which means that they are providing liquidity to the market. “Taker” orders, meanwhile, are those that are matched immediately and thus take away liquidity. Typically, exchanges charge lower fees for maker orders.
In most cases, maker and taker fees will both be less than 0.60%. This is much less than platforms like Coinbase or Gemini charge on their standard accounts. Also, most exchanges will reduce your maker/taker fees as your 30-day trading volume increases.
It’s not uncommon for crypto HODLers to store their private keys on their own hardware or software wallets. But if you’re looking to actively trade cryptocurrency, you’ll probably need to keep your keys stored on your exchange’s servers.
This makes it essential to choose an exchange that takes security seriously. At the least, you’ll want to make sure that the exchange you choose keeps the majority of its clients’ assets in cold storage. But even better if you can find a platform that also provides cryptocurrency insurance.
Tools & Resources
Crypto trading is a completely different animal than investing. With investing, you’ll want to buy coins that you believe will gradually rise over the long haul. But the difference between success or failure with trading often depends on other factors, like your ability to examine charts or utilize advanced order types.
For these reasons, high-volume crypto traders will want to look for an exchange that offers a professional-level trading experience. Some of the popular trading platforms provide real-time order books and make it easy to execute trades with minimal clicks. And if you’re hoping to trade on the go, you’ll want to make sure that the mobile UI isn’t markedly inferior to the desktop experience.
Are you only looking to trade Bitcoin? If so, you’re in luck! You’ll be hard-pressed to find an exchange that doesn’t support it.
But once you move beyond BTC, you’ll begin to notice wide disparities in the number of currencies that are supported on the various exchanges.
However, if there’s a specific coin that you know you want to trade, you should probably visit the actual website for each exchange to make sure that it’s available in your country. For example, Binance offers hundreds of coins globally but just under 80 in the United States.
Most cryptocurrency platforms allow users to withdraw or transfer their assets to an off-exchange wallet at any time. Some exchanges, however, don’t allow cryptocurrency to be transferred in or out.
With the exchanges that belong to the latter category, your crypto assets can’t be withdrawn until they’ve been converted into a fiat currency such as USD. This might not be a problem if you’re a trader who doesn’t plan to hold onto coins for a long period of time anyway.
However, some traders may plan to do a bit of investing as well. If that sounds like you, it may be prudent to pick a platform that won’t require you to liquidate your positions before you can move your crypto to a different wallet or exchange.