Attention New Crypto Traders: Proven Tips on Using Binance and Other Exchanges

If you are thinking about getting involved with cryptocurrencies, the three most import decisions you’ll make are: the coins to own, the wallet to keep them in, and the exchange to trade them on. Of course, this is assuming that you’ve already spent some time learning how cryptocurrencies work, the inherent value in the cryptocurrencies, the risk environment, and how to navigate the volatility of the market.

Choosing a cryptocurrency wallet appears to be a simple task; the level of complexity required to set up and use a wallet of corresponds to the level of security that the wallet offers. However, when choosing a cryptocurrency exchange; the decision is somewhat subjectively based on nuances, background information, and outright preference. Nonetheless, below are four important things all beginners must know about cryptocurrency exchanges.

 Cryptocurrency exchanges are meant for trading and not investing

Cryptocurrency trading is different from cryptocurrency investments. An investor buys a cryptocurrency because they believe in its disruptive potential over the medium to long terms; they plan to hold the coin until it gains the critical mass needed to unlock the true value in its tokenomics. Cryptocurrency traders on the other hand are not particularly interested in the long-term prospects of a coin – their main goal is to profit from the short-term volatility of the coin based on market news, demand, and supply.

If you are an investor; there’s really no point in keeping your coins in a wallet on an exchange. However, if you want to trade, you’ll need to move your coins from your private wallets into a wallet on the exchange on which you want to conduct your trading activities.

You’ll need to make a tradeoff between simplicity (Coinbase) and complexity (Binance)

You’ll generally need to choose between simplicity and complexity when choosing an exchange. Coinbase is generally referred to as a beginner-friendly exchange while others such as Binance require more effort to navigate for beginners. The challenge however is that the simplicity of Coinbase limits your activities to buying, selling, and the storage of Bitcoin, Bitcoin Cash, Litecoin and Ethereum.

 In contrast, Binance offers a better trade off in providing access to hundreds of cryptocurrencies, providing more comprehensive market data, and allowing you to set up complex trading strategies. For more information on using Binance, you can read this guide.

A reputable exchange is worth its weight in crypto

Cryptocurrency transactions are practically untraceable and irreversible; hence, cryptocurrency, once stolen, can’t be retrieved. You can secure your cryptocurrencies in a private wallet, but you really don’t have much control over the coins in your trading account on a cryptocurrency exchange.  

The annals of the cryptocurrency market are littered with events of unscrupulous exchanges that disappeared into thin with their customers’ funds. Some other exchanges have been reportedly hacked with millions of dollars’ worth of cryptocurrency lost to hackers. You need to find a reputable exchange that is not likely to disappear overnight, and you’ll also be better off with an exchange that has survived hacking attempts in the past, than exchanges with unproven security measures.

If you have to Google “margin trading”, don’t do it

Once you become deeply involved with cryptocurrency trading, you’ll start seeing ads and offers from different exchanges asking you to try out their margin trading offers. The lure of margin trading can sound irresistible because you can potentially trade in multiples of the size of your portfolio to theoretically book exponential gains.

If the margin trade allows you to go 10X, you can trade $1000 worth of crypto with a $100 portfolio to earn a larger profit margin. The downside however is that if the trade goes against you, you’ll be liable to lose not just the $100 in your portfolio, but the $1000 you “borrowed” to place the trade. It takes more than a Google search to learn how to use margin trading effectively, don’t let greed end your cryptocurrency trading career.

1 Comment
  1. Melvin R. 3 months ago
    Reply

    the cryptocurrency market is too volatile for long term holds, this has been established.

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