First of all, there can be no definite list of the best cryptocurrency exchanges out there. It all depends on what a certain trader wants or needs. You can choose between several hundred of them and some exchanges are better for beginners, others are more appropriate for advanced traders. At some you can trade with fiat money and some only offer crypto pairs. Most of them are centralized, but there are also a couple of very good decentralized exchanges (also called DEXes).
Here are some of the things you need to look out for when deciding on which exchange you’ll be doing your cryptocurrency trading.
Do they allow you to deposit and withdraw fiat money
If you don’t own any cryptocurrency, you first need to deposit fiat money on an exchange to buy cryptocurrency. Not all exchanges offer this, some only allow you to deposit cryptocurrencies. Of the ones that do allow fiat deposits, several options exist. You can go for a bank transfer (SEPA), you can use a credit card or a debit card, or you can transfer money from your PayPal account and so on.
The other thing you need to look out for is withdrawing your hard earned profits. Exchanges that allow deposits usually also offer fiat withdrawals. However, some exchanges do this fast while others take their time.
To keep it simple, here are two suggestions. If you’re living in Europe, Bitstamp is the weapon of choice. It handles various types of deposits and it transfers fiat back to your bank account very fast. If you come from the USA, the most popular and credible choice is Coinbase, similarly offering a fast, varied and simple service.
There are over 1600 cryptocurrencies, as listed by the website coinmarketcap. None of the exchanges offers trading of all or even most of them. Even if you just want to trade the top 100 coins, you need to register at several exchanges. The biggest and most important exchanges often offer only a limited selection of cryptocurrencies. For example, both of the above mentioned exchanges currently offer less than 10 of them.
However, if you’re interested in a particular coin or if you want to trade more volatile or exotic coins, you’ll need to find the appropriate exchange. There are different ways to get information on where a certain coin is traded. The simplest way is to check CoinMarketCap or BitScreener. They hold the data about most cryptocurrencies and exchanges out there.
Finally, keep in mind the type of trades you want to place. Most exchanges offer only crypto-to-crypto trading. Some also offer fiat-to-crypto trading. When checking this out, do keep in mind that some exchanges look as if they are trading bitcoin for dollars, but in fact it is quite likely they are only trading tether dollars (that are in fact also a cryptocurrency, but more or less stable and pegged to the dollar).
To again keep your range of options simple, there are two exchanges with a wide selection of cryptocurrencies that I would suggest. Binance is one of the best cryptocurrency exchanges at the moment. It doesn’t offer fiat deposits and offers only crypto-to-crypto trading, though you can trade tether dollars. It is a respected exchange that has more than a hundred of the biggest and most talked about cryptocurrencies.
If, on the other hand, you want to explore the less known side of the crypto-scene and invest in or trade with the lesser-know coins (which are very often a lot more volatile), check out Cryptopia. This is the place where traders make their biggest gains and suffer the biggest losses. Liquidity on its coins is often questionable, but that is half of the fun.
There are three main things you need to look out for in terms of trading features and the best cryptocurrency exchanges should have at least one of these options:
- stop-orders feature;
- margin-trading option;
- short-selling option
Stop-loss orders are orders that execute automatically if a price level gets to a point where a trader wants to exit a trade with a predetermined loss. This is one of the more important tools for safe and profitable trading
Margin trading means you can buy 2, 10 or even 100 times the amount of cryptocurrencies than you would otherwise be able to. This may sound good but using leverage can lead to large losses and can easily wipe out your capital. Stay away from this unless you know what you are doing – and even if you do, still try to use it as conservatively as it gets.
Short-selling (also known as shorting or going short) means that you are selling a cryptocurrency that isn’t owned by you. When you short-sell a coin, the exchange or another trader will lend it to you for a fee. If you buy it back and return it at a lower price, you make profit. If it goes up, you lose money. Without the option for going short you can only trade upwards moves, but with shorting you can also make money on the down swings.
A very good exchange offering all three types of trades and trade orders is Bitfinex. Unfortunately, US-based citizens can’t register for trading at this exchange. Furthermore, it also demands you deposit a $10k worth of fiat or cryptocurrency before you start trading. The second option is Okex, another big and and relatively respected exchange with many trading pairs available.
Other things to look out for
There are many other factors you need to take into account when choosing the best cryptocurrency exchanges for you. Some of them are: asset liquidity, trading and withdrawal fees, user interface friendlies, local exchange rates, reputation, customer support quality, security, withdrawal processing times, local regulations, etc.
You also need to take into account that this is a mostly an unregulated market. Keeping your funds on a cryptocurrency exchange is always risky. Your funds may be gone forever for a wide variety of causes.
You may now know some of the best cryptocurrency exchanges – but first things first
Until now I listed only six exchanges. There are many others that I frequently use and in which I have some degree of trust. However, as you get to know the market better, you can go to others as well. I have some fondness for trading on Bittrex and Kucoin. Of the decentralised exchanges, Idex is also pretty good.
Finally, a word of caution. A lot of people lost a lot of money when investing in and trading with cryptocurrencies. DO NOT enter this market without proper preparation. Learn the ways of the technical analysis and try to get the feel for the specifics of the cryptomarket and cryptocurrencies. Always use triple-caution. A good place to start with all of this is the Crypto Trade Academy online video course. It will get you set up to enter this space and – among other things – equip you with further skills for choosing the best cryptocurrency exchanges by yourself.