The world is getting more and more digital each day. In the process, different spheres of people’s lives become linked to the Internet and the online world. The financial markets aren’t the exception.
The advancements in the shape of cryptocurrencies and forex trading have revolutionized the way people transfer money forever. Not to mention that the new digital coins have different values and uses than what people are usually accustomed to. Therefore, all of this can be a bit confusing and complicated to handle by yourself. That’s why many people turn to individuals with advanced experience in this matter. They are known as cryptocurrency brokers.
To assist you in learning more about them including where to find reliable ones, in the following paragraphs we’ll elaborate more details. Let’s start!
Basics – What Cryptocurrency Brokers Do
In general, cryptocurrency brokers are responsible for locating buyers and sellers that possess large quantities of crypto. Then, they pair them together to ensure a successful sale. This has proven to be a quicker process when compared to a classical exchange.
Another detail is that this is done on an over-the-counter (OTC) market through a dealer’s network. Opposite of the centralized exchange, this process is decentralized. Moreover, on a classical exchange, there is a danger of the difference between the expected price on the trade and the price that clients actually get. Often there is slippage and the price varies.
To prevent this, cryptocurrency brokers make sure one rate is implemented during the selling. They do this with the help of the OTC market.
How to Choose the Right Cryptocurrency Broker for You
If you want to open a trading account with a cryptocurrency broker, you should make sure you trust the right people. Moreover, when searching for trading opportunities, you should pick a reliable broker to accompany you in this process. That way, the client can be certain that the expected and real price will overlap for them and they won’t lose anything.
Research Online Platforms
Firstly, users should go on an online hunt and map websites that look professional. They should have clear interfaces with the brokers clearly displayed for everyone to see. Aside from the companies where the forex brokers come from, there should be details about the minimum deposits, location, instruments, the payment platforms that are accepted as well as the maximum leverage.
Check the Regulations
The cryptocurrency brokers should be regulated by certain agencies like NFA, FCA, CySec, and similar. That way, clients are kept safe from deceptions and get what they deserve.
Conditions and Expenses Surrounding the Trade
Usually, there are specific expenses and conditions stated with small letters at the bottom of the trading documents. So, look for them and read them carefully to avoid higher expenses than the ones you’ve planned. They may be related to financing fees that were changed overnight as well as spreads.
Consider that cryptocurrency markets are changing rapidly. As they are very unpredictable and prone to sharp up and down movements, clients should be ready to lose some if not all of the invested funds.
Therefore, be mindful of the risk and understand what’s at stake before going into this process. And recognize unrealistically high benefits related to leverage in order not to be a victim.
Read Other People’s Reviews
Finally, other people’s experiences matter a lot for this. In fact, they largely impact the clients’ choices when it comes to hiring the cryptocurrency brokers. So, it’s a nice idea to go through their reviews before making the final decision. The main thing you should do here is to learn to distinguish real and fake reviews. Especially, open your eyes to possible scams and issues with money withdrawals.
What to Ask Your Cryptocurrency Broker
After deciding which broker to go for, it’s time to contact them. But when we’re talking about all the questions and topics one can and should ask their broker for cryptocurrencies, some may say “Where to begin?”. And indeed, this whole financial tech field is pretty new even to experts and legal bodies of governments all across the globe. Nevertheless, we can boil it all down to a couple of things that are pretty imminent and can differ from one broker to the next.
For starters, asking the broker if they’re closed during the weekends is a legitimate and reasonable question. The reason for that is that the cryptocurrency exchanges are operating even on Saturday and Sunday. So, if the broker doesn’t work on these days, then traders won’t be able to execute the exchange or even react.
A big number of brokers prefer long sales when working with cryptocurrencies. But you can ask them if they do short ones, too. The strategy of implementing short sales is an effective shielding mechanism for traders in case the price increasingly falls down. This is pretty relevant for bitcoins and similar ones.
Moreover, the answer to the question if the broker hedges can bring significant peace of mind to the trader. Hedging prevents the broker from suffering huge losses because of their clients. It also says a lot regarding the risk management strategy and tactics of the broker.
Just like traders earn through the crypto trading, brokers have to earn something, too. They get their income in the form of a commission. Often its price is close to the one charged when trading equities. Having said that, some brokers implement certain margin rates. That’s why you shouldn’t forget to ask about all of this as well.
After all of this, it’s understandable that cryptocurrency and forex trading are complicated processes to do on our own. Therefore, it’s advisable to get a broker that will make sure your rights, prices, and expectations are met during the trade.
Now we would like to hear from you. What are your thoughts on this matter? Have you worked with a cryptocurrency broker or do you plan to start? Share your experiences and opinions with us in the comments.