Are you looking to begin trading or investing in cryptocurrency in Australia? Well, the first thing that you want to do is find reliable and trustworthy platforms to exchange crypto in Australia. With so many options, we understand that it can quickly become overwhelming.
To help you, we have drawn up this list of the top five tips to consider in finding and selecting a cryptocurrency exchange.
1. Understand Your Needs and Goals
First, you need to identify and understand your needs. Are you looking to simply day trade and only try to earn gains off little movements in the markets? Are you looking to do something a little more complex than simply buying and selling? Or are you looking to trade in large volumes?
Exchanges typically offer a varying range of features, and you need to identify which ones have features that best align with your needs. When you can find an exchange that aligns with your trading style and investment objectives, this will ensure a more tailored and satisfactory trading experience.
2. Prioritize Security
The next vital thing to do is to understand the various security measures practiced by the exchanges. With the increasing number of cyberattacks and hacking incidents targeting the crypto ecosystem, protect your digital assets by choosing only exchanges that prioritize security.
Almost all other issues can be fixed. Delayed transactions? Well, a chat with customer support should do it. Faulty UX? You can easily just move your business elsewhere. Security breaches, on the other hand? Your entire investment can get entirely wiped out in a split second!
Encryption and two-factor authentication are some of the most basic features provided. Any exchange you choose should have those two at the very least. Additionally, consider if the exchange keeps the majority of customer funds in offline, cold storage wallets, as this adds an extra layer of security against hacking.
Also, look at past track records. Any exchange that has suffered catastrophic losses due to major security breaches in the past isn’t one that you want to trust with your investment. And if there are indeed security breaches, pay attention to how the exchange responded to these incidents. Know how their users were affected and consider whether there is insurance coverage for potential losses due to hacking or theft.
3. Compare Fees Across Different Exchanges
All cryptocurrency exchanges charge some form of fee for different activities. You need to consider these fee structures when making a decision.
First, there is the trading fee. This is typically a percentage of the transaction value and can vary greatly. Some exchanges offer tiered fee rates that lower the fees for higher transaction values, while others simply charge a flat fee percentage.
You need to think about what volumes you are going to be trading, your intended frequency of transactions, and how that translates into fees. Essentially, if you’re going to be trading large volumes, it may be best to choose an exchange with a tiered fee structure.
There are also deposit and withdrawal fees, which, while typically insignificant, can add up over time. So, if you are going to be making frequent transactions, you may want to consider going with a platform that charges as little as possible.
Another fee to consider is the network fee, also known as the blockchain fee. This fee is charged by the cryptocurrency network itself, rather than the exchange platform, and is typically used to process and verify transactions. They can vary, depending on network congestion at the time and transaction size.
Lastly, stay on the lookout for any additional charges or hidden fees. Many exchanges charge these undisclosed fees for margin trading, lending, and other similarly advanced features. You need to stay up-to-date on these so you don’t end up losing too much on them.
4. Check for Liquidity
Liquidity, in this case, essentially means trade volume. It is the ability to buy or sell your cryptos quickly and at a fair price. When an exchange has high liquidity, that means that there are many buyers and sellers on the platform, making sure that there are always sufficient counterparty options for every trade.
A higher trading volume indicates that the market on the exchange is liquid and that there is a satisfactory number of people actively trading at every given time. With high liquidity, you can get tighter bid/ask spreads and better price stability.
Another way to assess the liquidity of any crypto exchange is to look at the order book. It’s simply a ledger that shows all the buy and sell orders for a particular crypto token. When there are many orders at varying price levels, this is usually a great indicator of market liquidity and depth.
5. Read Cryptocurrency Exchanges Reviews
Experience is always the best teacher, and luckily, it doesn’t have to be your experience. You can learn a lot from the experiences of people who have used the exchanges that you’re considering. These reviews provide insight into their experience, helping you gauge the reliability of the different exchanges and uncover any potential red flags.
Conclusion
There are a thousand and one crypto exchanges out there today, and unless you’re some sort of high-volume trader, chances are you’ll only ever need about two or three of those. These exchanges that you choose will, to a very large extent, shape your crypto trading experience.
So, you need to choose them with the utmost care and consideration. We hope that, with the tips that we have discussed, you now know everything you need to find the best crypto exchange in Australia.
