How to Choose a Crypto Exchange
There are plenty of crypto exchanges in 2022, but some are better than others depending on your goals.
Due to its unpredictable and speculative nature, investing in, and trading cryptocurrencies is a risky endeavour, regardless of where you acquire them.
When it comes to choosing a cryptocurrency exchange, our top picks emphasise security, and each exchange clearly states which measures are in place to protect customers’ money. A long-established bitcoin exchange is generally a safer choice than a new one.
What Are The Types of Crypto Exchanges?
Like a stock exchange, a cryptocurrency exchange provides the ability to buy and sell crypto assets in exchange for fiat or other cryptocurrencies and tokens, or to buy and sell derivative products, sometimes priced (and settled) in cryptocurrency.
On spot exchanges, traders can make real-time transactions with other (unknown) users. Since crypto is 24/7, spot exchanges are always open for trading.
Margin & Futures
Some exchanges offer leverage, usually via futures contracts. By using funds provided by a third party, margin trading allows for asset trades to be conducted. In contrast to standard trading accounts, margin accounts allow traders to get extra cash and help them manage their positions more effectively.
Buying and selling futures contracts, index futures, and options on futures are possible on a futures exchange. Members of the exchange, including brokers and commercial traders, have access to the exchange.
If an option is bought, the holder has the right (but not the obligation) to buy or sell the underlying asset or instrument at a given strike price on or before a specific date, depending on how the option is written.
Options are often used for hedging purposes, but they can also be used for speculation. Being highly sophisticated derivative instruments, their value depends on multiple factors such as time until expiration and market volatility.
Similar to the Bitcoin blockchain itself, decentralised exchanges are operated without a central authority. A decentralised exchange is more like a market than a centralised exchange, which acts as an intermediary between buyers and sellers.. By making peer-to-peer trading more accessible and less arduous, peer-to-peer trading is more convenient.
Decentralised exchanges are typically disadvantageous in terms of lower trading volumes, limited liquidity, a lack of customer service, and a generally poor user interface.
Choosing a Crypto Exchange
When choosing an exchange, it not only matters what your trading or investing goals are, but also the characteristics of the exchange you wish to trade with. Here are a few things to consider.
Reputation & Security
When choosing a crypto exchange, you should consider the reputation and security of the platform.
Research the exchange to ensure its reliability and safety before trusting your money to it. Consider the reputation of the platform, and also try to find out about the security measures in place to ensure your information and capital are secure.
Charting and tools
Most exchanges come with free charting, but some maybe more powerful than others. Some exchanges also include unique calculators for helping understand their products, for example PnL calculators or options calculators.
While the charting may be free, cryptocurrency trading usually comes with other fees. It is important to study an exchange’s fees table, since transaction fees charged can be drastically different across exchanges.
Most exchanges offer lower fees for great volume traded. Some exchanges give a rebate for executing ‘liquidity-providing’ limit orders. There are also other costs to take into account, such as funding rates for perpetual futures contracts, for example.
Liquidity & Spread
The amount of volume traded on the exchange is also an important consideration, because it can affect the width of the spread—the best buying and selling price available.
Higher volume generally means a healthier, more liquid market. But be aware, some newer crypto exchanges have been known to partake in “wash trading” (artificially increasing volume by trading against themselves) in attempt to plump up volume and make trading on the exchange look more enticing.
The Most Popular Crypto Exchanges
Best Exchange for Margin Trading
Binance has some of the lowest fees for margin trading on the market. Armed with a platform that is easy enough for beginner traders, but powerful enough for more advanced traders makes it any obvious choice. This exchange offers up to 20x margin and has the biggest volume and thus liquidity of all exchanges.
Best Exchange for Spot
One of the most well-known crypto exchanges, Coinbase advertises itself as the easiest place to buy and sell cryptocurrency. With 100s of cryptocurrencies and features such as “reoccurring buys”, it is the go-to exchange for spot trading.
Best Exchange for Altcoins
With over 500 coins available to trade on spot, margin, and even with bots,, KuCoin claims 1 out of 4 holder crypto with their exchange.
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