When you’re ready to take the plunge into cryptocurrencies, there are many things you must think about which are crucial to your success in the market.
Firstly, some financial experts like Natasha Janssens of Women with Cents describe trading crypto as being very similar to “gambling” and here’s a few of the reasons why she is hesitant about investing in them at this stage.
- They are volatile – prices can go significantly higher, then plunge and then do it all over again.
- They are unregulated: According to CMC Markets, as a decentralised currency, “cryptocurrencies are currently unregulated by both governments and central banks. They were developed to be free from government oversight or influence and are instead monitored by peer-to-peer internet protocol.”
- They are susceptible to error and hacking.
That said, there’s no getting away from the fact that cryptocurrencies are trending and that many people see it as the way of the future.
Some countries are increasingly moving to recognise crypto currencies such as Japan, and most recently El Salvador which in June became the first country in the world to accept bitcoin as legal tender.
So if you think crypto currencies are something you’d like to try, here’s what you need to consider according to BrokerChooser.
- Ensure they have a wide crypto selection
The most highly regarded digital assets such as Bitcoin, Ethereum (ETH) and Litecoin (LTC) are widely available on most brokers and crypto service exchanges but there are smaller digital assets however that may not be available in most broker product selections.
Due to this, if you’re serious about getting into trading crypto, it’s crucial to know which crypto assets are offered by each exchange or broker and weigh these up against your wants, goals and needs.
For example, crypto exchanges have massive, real coin selections, but on the other hand their safety is questionable compared to brokers. Brokers may offer a safer way to speculate on price movements, however on the flipside, their crypto selection may not be as extensive.
- Check for credibility, reliability, safety and experience
As the crypto currency space is largely a brand-new industry that is rapidly changing and not really subject to too much regulation, it’s important to check the credibility, reliability and previous experience of the exchange before jumping in.
There are two ways to trade crypto – either straight on a crypto exchange, or through a broker and a stock exchange with products specialized to follow crypto price movements.
- Make sure they have an easy to use trading platform
In a similar way to other financial assets, trading cryptocurrencies is more seamless with an easy-to-use trading platform that helps you manage your investments and provides information and insights on fees, trading history, active positions, and current results.
- The sign up process, commission & fees
The sign-up process can tell you a lot about how a brokerage will operate.
It may be hard to tell initially what you should look out for in the sign-up process, but as you get to know more about the industry this will become second nature.
Perhaps the biggest red flag to look out for is the request for a large deposit without any alternatives (e.g., different accounts with smaller minimum deposits).
- Look out for CFDs
Some brokerage portfolios contain or specialise in CFDs. These are complex and can be very risky instruments, thus not suitable for everyone.
- Assess your need
It’s important to write a list of what you are looking for by getting into investing in digital assets so you can find the right fit for you. Everyone is different and there is not a one size fits all approach when it comes to trading in cryptos.
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