Cryptocurrency Exchanges: How To Choose The Right Broker
In cryptocurrency exchanges, it may become necessary to use the services of a broker to be able to trade digital assets like Bitcoin cryptocurrency. This is because cryptocurrency is a speculative trading asset and many investors need guidance in their trading activities to remain profitable.
If you are simply trading in small amounts, you can just go to a cryptocurrency exchange and do the trading yourself. However, it is best to hire a broker if you are going to deal with high volume trading in a cryptocurrency exchange. Doing so will improve your potential profits.
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Who Qualifies as a Cryptocurrency Broker?
A cryptocurrency broker serves as a middleman between a buyer and a seller of valuable cryptocurrency. Some call this relationship a “dealer network” or an “over-the-counter market” instead. The reason you will need a cryptocurrency broker is so that this professional will search for a buyer or a seller for your cryptocurrency stash and arrange for a favorable price for the trade. It makes it more convenient to buy or sell cryptocurrency in large volumes.
Forex brokers are sometimes considered qualified to be cryptocurrency brokers. Some forex brokers have a better reputation than others in this kind of transaction. So you should be cautious about approaching a forex broker to initiate a buy-sell transaction for you with a buyer or seller, because of the large volume of cryptocurrency that will be traded at one time or in a few transactions.
Characteristics of a Good Broker
- Ethical – You probably already know that the cryptocurrency world is a volatile market all its own, especially if the cryptocurrency companies do not practice KYC (Know Your Customer) protocols. So it is important to find a good broker who has a strict sense of ethics, so that the broker won’t dip his fingers into the fund to enrich himself, at the expense of the cryptocurrency owner and buyer.
- Active – You will need a broker who is upfront about trading activities so that clients like you will know what the broker is doing with your money. You need a broker who will update you regularly, even daily, of your gains and losses when the broker is at work. The crypto market is a volatile one, so having a broker that stays up to date is a must.
- Competent and Educated – It does no good if the broker you selected is ethical, transparent and active if that broker turns out to be a sub-standard professional. This means you will need to check the skills of the broker by engaging in small trades at the start. Once the broker is deemed professional enough, you can trust the broker with your larger volume trades. You will also want your broker to be sharp and highly educated so that you know the broker can handle the intricacies of each trade.
The Value of Getting a Crypto Broker
The key then is to know how much profit you might get if you rely on a series of trades on the crypto exchange versus the real profit you will derive from a few or just one trade through a crypto broker. The value of tapping a broker to initiate a buy or sell transaction for you is that this professional might get a better price for your trade as compared to letting the crypto exchange handle it for you. Yes, either way, you have to pay a fee but it might be less of a hardship to go through a broker because your potential profit is bigger plus the broker will look for different trade offers on the exchange for you until a favorable price is found.