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Tips for Choosing a Crypto Exchange

Tips for Choosing a Crypto Exchange

By Federico Variola - 31-Jan-2024

Cryptocurrencies markets are notoriously volatile.

While this makes them a risky but thrilling asset class for many traders, it’s important to adequately prepare before taking trades. For novices and veterans alike, the platform a trader uses can be just as important as the trading strategies and tools they implement.

This article shares some key factors that should determine the exchange a trader uses from the perspective of the team at Phemex, which is a crypto futures exchange integrated into the Coin Market Manager dashboard. 

Fee Structures

One of the most important aspects to consider when choosing a crypto exchange is how expensive it is to use the platform. Trading fees are a normal cost of business for any trader, but not all exchanges charge the same fees. Failing to consider fees and calculate the price of taking trades can cause serious damage to a traders account, especially when managing a smaller account or using a very active trading strategy. (For reference, Phemex offers a basic fee structure of 0.01% for makers and 0.06% for takers.)

In fact, a recent poll on X showed that 50% of respondents simply do not care how much they’ve paid in fees to their current exchange. That number should be alarming to everyone who answered, “No, I don’t care.” 

Advanced Trading Tools

A trader’s chosen platform should offer an extensive array of trading tools that help its users succeed and maximize profits. From order types to number of listed liquid markets to proprietary features (e.g., futures grid trading bots), exchanges should build to serve their traders.

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Especially for beginner traders, exchanges should work to educate and simplify the early trading experiences of any user. Trading is difficult, especially as a novice. Education on complex trading topics and even casual market observations signal that a team is competent and customer-focused.

Perks and Benefits

Fees, trading tools, education, and other aspects of the trading experience on any exchange are important, but going beyond these basics is another way for some exchanges to differentiate themselves from the market to attract users. Good trading platforms must be constantly innovating and evolving to give the best to their traders. From prizes, discounts, community projects, or other crypto-native initiatives, crypto exchanges – unlike traditional finance exchanges – have numerous opportunities to showcase an innovative spirit and a desire to embrace everything the crypto industry has to offer. 

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Trial and Error is OK

Even if the very first exchange a trader uses isn’t the platform they stick with for the remainder of their career, it’s important to understand that experimenting with different platforms is okay. Whether a trader wants to learn and experience different exchanges, have a backup option for future trades, diversify some risk, or just compare features and trading tools during real trades, trial and error can be beneficial. Ultimately, understanding the benefits, security, and features of an exchange is the best way for a trader to prepare themselves with the best platform for executing and managing trades.