Crypto broker – Forex Academy

Crypto exchanges VS. Crypto brokerages – part 2/2

Trading Exchanges

Trading on a crypto exchange is quite straightforward. All you need to do is select the desired trading instrument and then open your trade. As the chart unveils, you will watch your position. You can place buy as well as sell orders. Most exchanges try to offer some form of different orders, such as limit orders.
One of the advantages that exchanges have over brokerages is that you can pick among a lot of different cryptocurrencies to trade.

Brokers

Brokerage platforms will usually have more analysis tools that will benefit traders to achieve their goals. Most of them have advanced analysis tools, as well as several variations of orders. However, the brokerage platforms will not offer you as many cryptos to trade as an exchange. Brokers have different cryptocurrency pairs available, but they mostly offer only the most popular cryptos.

Brokers also tend to have quite tight spreads, unlike some of the less liquid exchanges. This feature prevents slippage from happening.
Another great advantage is that the brokerage platforms have many more features to offer in general. Unlike most exchanges, brokerages offer the option to put multiple charts in your view-window, track the quote flow, use sets of indicators, etc. Some brokerages even offer the option to create automatic trading strategies without any previous knowledge of coding.

Safety & Security Exchanges
Crypto exchanges can be divided into two:
Centralized exchanges! Decentralized exchanges!
Centralized exchanges are considered relatively unsafe. You can create a very strong password as well as enable 2-factor authentication. However, this does not guarantee 100% safety of funds. The main thing is that the account owner is not the owner of the keys that hold the funds. As the exchange holds all these keys, hackers only need to hack one account – the exchanges, rather than each account individually. Many exchanges got hacked, and most of these funds never got back in the hands of the original owners. While exchanges are increasing their security levels as well as introducing forms of insurance, this is far from what brokers have.
Decentralized exchanges are considered the safest way to trade cryptocurrencies, as you hold your own wallet keys. However, these exchanges are not yet big enough to have good liquidity, which creates large spreads and slippage.

Brokers

Trading cryptocurrencies with a regulated broker will guarantee some degree of safety to the clients. First of all, most brokers are regulated with a reliable authority, such as CySEC, FCA, SEC, etc. If a broker is regulated, its business is strictly audited. Regulated brokers are also members of investor compensation schemes, which ensures claims of clients and against brokerages that are unable to meet obligations due to financial downfall or bankruptcy.
However, one thing to note is that almost no brokers trade with real cryptocurrencies, but rather with derivates. While this is not necessarily bad, traders should know that using brokers will often result in trading with contracts that derive their value from cryptocurrencies, rather than with cryptos.

Conclusion

In conclusion, while cryptocurrency trading is considered high risk and due to their volatility, people can choose safer ways to ensure that their funds are always in the right hands. Exchanges and brokers have their advantages and disadvantages, and traders should pick very carefully based on their goals while trading.

Crypto exchanges VS. Crypto brokerages – part 1/2

There are two ways that people can trade cryptocurrencies:Over an exchange Or With a broker.

This article will touch upon the basic things a trader has to do when trading cryptos over an exchange, as well as by using an online broker.
Extreme volatility and virtually unlimited profit potential that the crypto market brings got people going crazy about it. As a result, a lot of products and services appeared in the market. Trading via a broker or via an exchange has some differences, and they are not completely clear to the general public.

Signing up/Verification

Exchanges
The process of signing up to a crypto exchange is (in most cases) is as simple as registering on their website. Users are required to provide their email, create a password, and confirm the email address. Some exchanges might require a KYC verification, where you would be required to submit a valid ID as well as a proof of residence. The exchanges usually respond to verification requests within a day. There are, however, some cases where you don’t have to get verified once signed up.

Brokers
Signing up with a broker is, just like with exchanges, not a very difficult thing. In fact, the signup process is almost the same as on a regular exchange. On the other hand, in order to deposit funds and start trading, you will need to verify your account. As a rule, you will have to submit scan copies of either one or two documents: A valid ID or Proof of address.
The verification process is done much slower than on exchanges, as the average time of the verification is 15-days.

Deposits and Withdrawals

Exchanges
Depositing fiat to crypto exchanges can often be a hassle. Most exchanges do not accept fiat-to-crypto purchases. While there are many ways to buy cryptocurrencies out there, these transactions often have high fees and commissions.
On the other hand, withdrawing funds from exchanges can go two ways. If you want to withdraw your cryptocurrencies to a non-exchange wallet, this can be done easily and cheaply. However, withdrawing cryptocurrencies to a fiat currency account can be quite a hassle. Withdrawing cryptocurrencies to a bank account can be an issue as quite a lot of banks don’t accept money from crypto exchanges. The reason for this is that they can’t determine the origin of such money and transactions.

Brokers
Unlike cryptocurrency exchanges, depositing with a broker is much easier. A broker’s client offers a large number of ways to make a deposit. This includes credit cards, e-wallets, bank accounts, etc. You can deposit US dollars, euros, and often times, some other currencies. The ease of depositing simplifies the whole process quite a bit. On top of that, there are no deposit fees whatsoever on almost all brokerages.
As for withdrawals, broker terms are often more attractive than the terms that a cryptocurrency exchange has. While many exchanges pride themselves with low trading fees, they earn money on high withdrawal fees. However, brokers usually charge a fee of between 0% and 3%. This number can vary depending on the withdrawal method.

Check out our part 2 of Crypto exchanges VS. Crypto brokerages to find out more about the differences between the two in terms of trading as well as safety protocols.