The value of cryptocurrency markets is growing each year exponentially. As a result, new exchanges are also coming up to facilitate trading in this new form of currency. If you are choosing a cryptocurrency futures exchange, do your homework, and check the security measures on the platform.
Also, remember that a majority of exchanges do not work under specific rules and regulations. Your money may be at risk if you fail to pay attention to these critical factors.
Location Matters a Lot
Before selecting any exchange for cryptocurrency futures trading, make sure that it is legal and available in your country. In many nations, there is a regulatory fog surrounding this market.
Hence, exchanges cannot operate in these geographies. Many exchanges may not accept U.S. citizens as their customers as well. It makes sense to look at the address of the company for protecting against any frauds. If you get hacked, it will be challenging to determine the right jurisdiction if you don’t know about the exchange location.
Availability of Market Data
For successful trading, you need easy access to market data and technical details. With an advanced platform, it becomes easy to find the prices displayed across connected venues using consolidated data feed. Also, the platform should provide access to various crypto markets with a single account.
High Trading Volumes and Liquidity
You would always want to pick a cryptocurrency futures exchange that has higher volumes and liquidity. High volume trading leads to better accuracy of prices. The exchange processes several transactions at once. So, they have higher stringency in their pricing and approvals.
The experts recommend not keeping too much money on any exchange for too long. It can be risky even if you choose a verified and researched exchange. Also, check if the liquidity is aggregated through multiple venues like OTC desks, exchanges, and other resources.
Security against Risks and Frauds
In the past, digital currency exchanges have been subjected to many hacking incidents. The exchange hack of Mt. Gox in 2014 resulted in a loss of $430 million and 740,000 Bitcoin. Such scams or hacks can put your money in danger. Hence, it is incredibly critical that you pick the exchange following the best security protocols.
See if they keep the stored funds safely with measures like multi-signature access by authorized people only. You can also make sure that the exchange has nearly 95% of its assets in offline facilities.
In this respect, look at the following aspects.
- Check the security protocols in the exchange’s web address
- Two-factor authentication for login safety
- Auditing and monitoring of exchange activities
- See if the exchange ensures its funds to reimburse your losses
Excellent User Experience
When trading through a cryptocurrency exchange, you need a smooth experience without any interference. So, pick the platforms that protect your identity and provide a simple user interface. Check the performance of the platform on both a desktop and a mobile device. If the design is responsive, you can manage your trades through your phone, even on the go.
Most importantly, check the exchange reviews and see what others have to say about the support and services it offers. Some exchanges provide the fastest time as well. They allow you to register, deposit the money, withdraw cash, and start with the contracts within a few minutes.
Compare the Charges
Before finalizing a cryptocurrency futures exchange, it is essential to compare the fees with other platforms. Usually, the exchange will charge less than one percent for each transaction.
The charges may decline further if the volumes increase. Also, check the withdrawal fees as it may be reasonably high on some platforms. Lastly, review and compare the exchange rates of coins at several platforms for maximum advantage.
Ask about the Policies and Reputation
Not every cryptocurrency exchange is the same. At some exchanges, you may still not get digital tokens. As a result, you have to pay in cash for your trades. In some locations, there are compliance requirements and registration procedures for these platforms. Make sure that the exchange follows all these guidelines to protect your investment.
When trading cryptocurrency futures, you may also need help and support of the experts to understand the basics and make informed decisions. If an exchange has a proper support system and guides to lead your way, you can consider registering and trading with them.