With the invention of digital currencies like Bitcoin, the world of online trading has opened up to a whole new demographic of people. This is due to the fact that trading in cryptocurrencies is far more easily accessible to average, everyday citizens than traditional stocks and bonds.
Prior to the cryptocurrency revolution, online trading was a relatively complex activity that only financial professionals undertook. However, with the advent of simple-to-use online bitcoin trading sites that require only basic details to register with, anybody can now be a Bitcoin trader. Most professional traders trade on complex cryptocurrency exchanges like BitMex or Binance but there are also simpler trading apps and platforms available like eToro or Coinbase Pro.
Whether you are new to Bitcoin or an old hand at trading, there are several qualities you should look for in a Bitcoin trading site. The basics include a site that is accessible from your country and one that supports a Bitcoin trading pair in your currency, but in addition to these, there are several other important points you should consider.
Cryptocurrency is a young and emerging industry, which offers some positive benefits in the form of limited regulations but also some negative ones in the form of, well, limited regulations.
There are many unregulated Bitcoin trading sites which present potential threats to customers. These are either in the form of a scam site which could steal your money or badly managed sites which could result in loss of funds due to operational errors.
The best way to find out if a site is reputable is to read independent online reviews first. Many sites pay people to write good reviews for them, so make sure the site has been around for a long time and has hundreds or thousands of reviews.
2. Exchange Fees
Once you have found a reputable site, the first thing to check is what fees it charges. Obviously, the site with the lowest trading fees is best but some sites might advertise low or zero trading fees without mentioning their high withdrawal fees.
I have heard horror stories of traders who have traded fee-free for weeks or months only to be hit with 50 percent withdrawal fees when they choose to cash out their profits. Make sure that the site you choose clearly details all deposit, withdrawal and transaction fees clearly.
When trading online you will often want to leave a certain amount of funds on a trading site or exchange to save time and money. For this reason, it’s important to find an exchange with very good security since it is essentially protecting your money.
All reputable sites will have secure socket layer protection (SSL) which is represented by the URL starting with HTTPS rather than just HTTP. This ensures any data transferred between you and the site is securely encrypted. In addition, sites should always use two-factor authentication (2FA) for access, which makes it almost impossible for hackers to break into the site by stealing customer login details.
4. Order Book Volume
Any decent trading site or exchange should have a high level of users trading on it daily. The trading sites order book volume is a good indication of just how busy the site is. This is also sometimes referred to, or can be measured as, ‘average daily volume’.
However, this isn’t a definitive measure as decent new trading sites might still be attracting customers and have a low order book volume or not display the order book at all.
5. Purchase and Deposit Method
Depending on your situation you may have different requirements for purchasing or depositing Bitcoin onto the trading site. If you don’t already have a Bitcoin or need to buy Bitcoin with a credit or debit card then you’ll need to find a site that supports crypto purchases with fiat.
However, most Bitcoin traders will already own some Bitcoin and have it stored in a digital wallet, in which case the only requirement is a trading site that supports cryptocurrency deposits.
Online trading is a risky business as it is and shouldn’t be made more dangerous because of an untrustworthy website. Always make sure to double check the five features above on any Bitcoin trading site or platform you choose to use.
A sixth factor to consider is customer service. While this may not directly affect your trading experience, it is important to know that you can talk to someone if problems arise. After signing up to a site, try to contact the customer support and see how quick and reliable their response is.