In our previous blog on Making your Trading Bot, we spoke about what steps you need to take in order to make a bot from scratch. An important prerequisite for this is to convert your fiat to tradeable cryptocurrency like Bitcoin or USDT (Tether). But before you trade fiat for cryptocurrency, you need to have a wallet to store the newly bought crypto. Then, you are all set to trade!
So now you have some money that you want to invest in somewhere. The portals connecting our world with the world of crypto are called Exchanges. But before selecting an exchange, consider some factors.
1. User Experience
Design and user interface can make a big difference in how successfully you can navigate the exchange platform. Ask yourself this. Can you get a query answered by a well-informed human being, or will you be directed to an insufficient FAQ page or user forum? A good customer support center can go a long way.
We would suggest choosing exchanges which need some sort of ID verification from you. Even though they may take time, they are easily 100 times more safe and secure than anonymous exchanges. Also see if the user interface is simple and easy to use on both a desktop and a mobile device. Check if your exchange has any Anti-Money Laundering (AML) practices in place.
If you are a day trader, you wouldn’t want high individual transaction fees. On the other hand, if you just want to buy a few coins as a retirement investment, fees will be less relevant than other features aimed at frequent traders. One thing to keep in mind is to look at all the fees. One platform may charge high fees for depositing fiat currency but low transaction fees between coins. So choose as per your requirement. General industry average for fees is 0.25% of the exchange amount.
Transparent exchanges generally publish their cold storage address or help check their reserves in other ways, like audit information.
If it’s really easy to open an account, and it’s really easy to shield your cryptocurrencies from the IRS, then it’s going to be just as difficult to get your money back when things go south. Hence it is important to verify the information available.– Gün Sirer
Exchanges with higher trading volumes generally have more liquidity options. Platforms with more liquidity could serve as a hedge against price volatility. The concept of “locked-in pricing” is important because it guarantees you the price at the time of your transaction irrespective of whether the transaction gets settled immediately or not.
After making a choice of exchange, you can proceed to exchanging your fiat for cryptocurrency. And that can be done following some simple steps and being vigilant at every step.
Step 1 – Creating an account and signing up on an exchange account. This is a fairly simple process which would require you to give your details like Name, email address, etc.
Step 2 – After setting up your account, you would have to set up your account security. Most exchanges would require a 2-Factor authentication. A good way to do it would be through an Authenticator App.
Step 3 – A very small but important step is the Know-Your-Customer (KYC). KYC would happen before you can deposit money into your account.
Step 4 – In this step, you add a method of payment. Do consider factors like does the exchange let you buy, sell, deposit or withdraw credit and what is the speed of transaction before you choose a method of payment. For example, paying through a debit card can be done instantly whereas wire transfer could take a few days to process.
Step 5 – Finally you verify your identity and can start trading.
Last but not the least, it is extremely important to protect your cryptocurrencies. Your crypto wallet is your treasury and you should not lose it at all costs. Your wallet will have a public key and a private key. The public key is to receive cryptocurrencies and is shareable. Do not ever share your private key with anyone. It is for your eyes only.
Keeping all these points in mind, you are free to start trading your cryptocurrencies!
A few quick references below:
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