9 Cryptocurrency Platform for Trading Crypto in 2018
Cryptocurrencies have become an investable market in its own right. Despite being shunned by institutional investors for much of its existence, it has flourished beyond our wildest imaginations. In fact, even institutional investors are now drawn to the crypto markets.
Passive investing is considered as the simplest way to invest. You simply buy an asset and hold on to it regardless of what the market does in the short-term. If you had taken a passive approach to the cryptocurrency markets, without a doubt, you would have made money, in fact, a lot of money.
However, the incredibly volatile nature of the cryptocurrency markets makes it a fertile ground for traders, traders who live off volatility. As you might now, 2018 started off with increased volatility of the cryptocurrency markets.
If you are new to Crypto Trading read the definitive Step-By-Step-Guide.
The three-year-long market has finally entered into a period market correction. Although most buy-and-hold investors would despise the current market environment, we traders simply love and feed off of such wild swings in the markets.
In this article, I want to talk about cryptocurrency platforms for trading through these treacherous but potentially profitable markets.
Cryptocurrency Platforms for Traders
eToro is an Israeli brokerage firm founded in 2006 as a social trading network. The company combines social networking aspects for traders and investors with a professional investment and trading platform.
Despite being a conventional brokerage firm, it was one of the first established brokerage firms to realize the potential for cryptocurrencies market and offered bitcoin as a tradable instrument as early as 2014.
eToro offers an award-winning trading platform to its traders. The all-in-one platform can be used to trade across several different markets including, cryptocurrencies, forex, commodities, stocks, etc. The platform also has an app for Android and iOS devices.
What truly makes eToro unique is its social trading features, which allows traders like you and me to harness the power of information flow in order to maximize our returns. eToro’s platform allows us to view other traders’ trading statistics, open positions, stop-loss levels, etc. This allows us to learn from other traders and understand their strategies.
There is also a copy-trade feature, which allows us to copy trades of successful traders. If the trader we’re copying makes money, we would also make money and the profits will be used to pay the successful trader a nominal fee for sharing their trading performance.
Coinbase is one of the most popular and trusted cryptocurrency exchange. It is also one of the largest exchanges with operations in 33 countries. Coinbase is often considered as the best exchange for complete beginners as it offers one of the simplest cryptocurrency platforms.
Moreover, the company has developed the largest network of banking relationships, which allows it to support transactions in EFT payments, SWIFT, ACH, SEPA transfers and even accepts credit cards and PayPal. Due to these reasons, the exchange has experienced rapid growth of its user base.
Coinbase Vaut Service
Like conventional banks, Coinbase offers a service called the Coinbase Vault, which can be used for securing large sums of money in cryptocurrency. The service allows investors to store cryptocurrencies in an account protected by multiple layers of protection. More importantly, traders remain in control of their private keys.
Downsides of Coinbase
The ease of access and use comes with a few downsides as well. Coinbase is the only exchange that supports PayPal transactions. However, this comes with some downsides. Coinbase operates like most conventional financial institutions and can freeze accounts and so forth a number of reasons.
Bitcoin Mercantile Exchange, commonly referred to as BitMEX, is a trading platform that functions similar to most commodities or future exchanges. The platform was developed by a group of financial professionals with the aim of creating a platform on par with established derivatives market.
BitMEX is a unique platform in many ways if you compare it with other cryptocurrency platforms. The main reason for its success is that it was developed solely for experienced and professional traders, which is one of the reasons why it managed to attract professional traders who wanted a taste of the cryptocurrency markets.
If you want a professional derivatives trading platform for cryptocurrencies, then BitMEX truly is unrivaled. If you are new to cryptocurrency markets and simply wish to buy some bitcoins, then BitMEX is definitely not for you.
The unique aspect of the trading platform is that it exclusively provides derivative contracts for cryptocurrencies. It does not accept fiat currency and bitcoin acts as its base trading currency. While trading on the platform, you can leverage your trades up to 100x the total margin you have.
The platform has one of the highest trading volumes of any cryptocurrency exchange, but you should be mindful of the liquidity available in individual markets. Moreover, being a professional trading platform, you can find every tool you could possibly need to profit from the markets.
Since BitMEX is a derivatives exchange, its fee structure is also unique to the cryptocurrency market. There are three main types of fees, maker fee, taker fee and settlement fee. This type of pricing is usually associated with futures exchanges.
Makers are traders who put in limit orders and wait for traders who are willing to accept the price offered by the makers. Makers can earn a rebate for creating liquidity in the market. The taker fee is set at 0.075% of the transaction, whereas the maker fee can be -0.025% depending on the circumstances.
Lastly, the company doesn’t charge any fees on the deposit and withdrawal of funds from the platform. This another attractive feature because it eliminates many of the hidden costs you find on most platforms.
Kraken, based out of San Francisco, is considered as the largest cryptocurrency platform in terms of euro-denominated bitcoin transactions. The exchange serves traders and investors in the US, Canada, EU and Japan.
The exchange has developed a reputation for one of the lowest transaction fees among reputable exchanges. It also features an advanced trading platform for margin trading. However, the cryptocurrency platform is not the most user-friendly, which is why it attracts mostly experienced traders.
Security is one of the most important aspects of a good cryptocurrency trading platform. Kraken is considered as one of the leading exchanges in terms of online security and the security of its customers’ funds.
The exchange offers dual-factor authentication feature for trading and funding features along with logins. It also allows its users to set up a master key for password recovery and bypassing two-factor authentication in the case of a hack. It also offers something called the global settings lock, which prevents account information from being tampered by a hacker.
Account Tiers and Fees
Kraken offers its users four different account tiers, which dictates how much fees its customer pays. Trading commissions and fees are operating costs for traders. These fees, although, small per transaction, can add up to a significant amount, especially if you’re an active trader.
The exchange has a multi-tiered fee structure. This means if you’re an active trader, chances are that you will pay less in fees. The fee per transaction is determined based on the account type and the amount of volume you’re generating on the exchange.
Bitfinex is considered as one of the leading trading platforms for cryptocurrency traders. It is also the largest exchange in terms of total transaction volume. One of the benefits of trading on a high-volume platform is narrower spreads, the difference between the bid and ask prices. And, of course, if you’re trading in the millions, you would need the liquidity to process your trades.
Bitfinex despite being one of the most popular cryptocurrency platforms has had its troubles. In 2016, the exchange was hacked and nearly 120,000 BTC were lost. However, unlike other exchanges, Bitfinex fully compensated its customers a year later, but only those who held their BFX tokens (IOUs).
Despite the hack and the loss of millions, Bitfinex took care of its customers and managed to earn back the trust of the crypto community.
Bitfinex boasts of one of the most advanced trading platforms available to cryptocurrency traders. It offers a completely customizable GUI and offers margin trading on over 50 trading pairs. It offers all of the essential trading orders such as trailing stops, scaled orders, fill-or-kill orders.
The trading platform offers up to 3.3x leverage on trading positions. Yes, 3.3x leverage is not considered a lot if you consider the 100x and 500x leverage offered to forex traders. However, we still need to understand that 3.3x leverage is a lot if you factor in the extreme volatility in the cryptocurrency markets.
At any given moment, traders can leverage their positions using their margin, which acts as collateral to borrow money from borrowers by paying them interest payments. The automated platform automatically liquidates when margin requirements are not met, which ensures that losses cannot exceed total margin deposits.
In order to facilitate margin trading, Bitfinex has one of the most robust funding mechanisms. Let me explain how the lending platform works along with the trading platform. Let’s say, you made a lot of money from bitcoins but at the same time, you realize that trading is not for you. You can lend your capital rather than letting it sit and earn interest on your capital while still experiencing capital gains when the price of bitcoins appreciates.
This gives you an incentive to store your wealth with Bitfinex and have the peace of mind that you are not risking your capital beyond the volatility of the bitcoin market. This way, traders have access to cheap credit and you can earn a decent return through interest payments without actually risking your capital through trading.
Bitstamp, based out of the EU and founded in 2011, is one of the oldest platforms for trading cryptocurrencies. Over the years, it has built a solid reputation as one of the most reputable cryptocurrency trading platforms.
Bitstamp’s trading platform is best suited for intermediate and experienced traders, who can properly leverage its advanced trading features to profitably trade on the markets.
Along with Kraken, Bitstamp is also known for its low fees. The company charges a mere 0.5% on deposits and withdrawals of fiat, whereas the average fee is somewhere around 2%. Deposits and withdrawal of cryptocurrency don’t entail a fee. Even the trading fees are quite low, though, it varies based on the volume of transaction.
The highest you can expect to pay per transaction would be around 0.25% for trades worth less than $20,000. The fee can be as low as 0.10% but you would need to have more than 20 million available as trading capital in order to benefit from the lowest fee.
Customer support is one those elements that you will find being a constant across the entire cryptocurrency financial markets. Most cryptocurrency trading and exchange related companies are quite unreliable in terms of customer support.
Bitfinex, on the other hand, is one of the few trading platforms that has actually invested in a proper customer support operation. Aside from writing to the company using its support ticket system, you can also call the company on its UK phone number in the case of emergencies.
None of the original cryptocurrency exchanges exist anymore. Bitstamp being one of the oldest operational exchange is still thriving. The simple reason is that it leads the industry with its cutting-edge cyber security technology.
There have been security breaches in Bitstamp’s past, but the company holds the majority of its customers’ funds in cold storage, which mitigates the risk of catastrophic losses. You can expect your capital to be safe while trading on Bitstamp’s trading platform.
Poloniex is the largest trading platform for altcoins. The company was founded in 2011 and is based out of Delaware. Over the years, it has become one of the dominant platforms for trading and investing in altcoins, even the most obscure and minuscule market-cap cryptocurrencies.
Unlike many of the well-established platforms, Poloniex does not accept deposits of fiat currencies, which means you can’t sell your cryptocurrencies for cash. So if you want to trade on the Poloniex platform, you will have to first buy bitcoins and transfer them to your Poloniex account.
As mentioned above, Poloniex offers by far the largest collection of listed cryptocurrencies. In fact, the list is so big, it would be impractical to list all of the cryptocurrency pairs. As of Feb 2018, Poloniex has 97 listed cryptocurrency pairs that can be traded.
Since the platform doesn’t allow traders to deposit cash, BTC, ETH, XMR, and USDT are used as the base currency for trading. Tether (USDT) is a cryptocurrency that represents US dollars, where 1 USDT equals to 1 USD. This allows traders to move out to cryptocurrencies without actually holding any cash.
Another area where Poloniex has made a name for itself is in its margin trading features. Similar to Bitfinex, Poloniex also utilizes a P2P lending mechanism for providing funds for leveraged trades. This helps attract both cryptocurrency traders and holders who can earn interest on their capital without risking their capital to leveraged market risk.
Poloniex offers one of the most sophisticated trading platforms for altcoins. If you are interested in trading altcoins, Poloniex is one of the few options you have in terms of a professional-grade trading platform with all of the advanced trading features.
According to the company, the vast majority of the funds deposited by traders are stored offline in multiple different cold storages. A very small amount is held online, which is used to facilitate active trading and day-to-day settlements. Other than that, the company doesn’t disclose any other security measures it takes.
Coinigy is different from all of the platforms we’ve talked about so far. It does not have its own market instead it allows you to link with most of the cryptocurrency exchanges and trade on Coinigy’s platform with unfettered access to various different cryptocurrency markets.
Most of the day-traders and frequent traders are attracted to Coinigy because it allows them to trade directly off the charts and across multiple exchanges. You would obviously have to create accounts across different exchanges and fund them before you can trade on them using Coinigy.
However, the ability to trade across different exchanges and right off the charts from a single platform is really important, especially if you’re a full-time trader. There is also the benefit of not constantly accessing your trading accounts on different exchanges, which minimizes the potential for your sensitive information being stolen by hackers.
CrypTrader is another trading platform for cryptocurrencies. It is a bit similar to Coinigy but offers a completely different trading experience. Unlike Coinigy, CryptTrader is designed to act as a full-fledged trading workstation.
The platform is modeled after the popular trading platform, MetaTrader. You can think of the platform as a fully customizable canvas. You can create multiple workstations according to the different markets you analyze and trade.
This allows traders to create a workstation that works perfectly for a multi-monitor setup. You can keep an eye on all of the markets you’re interested in without missing any of the big moves that tend to happen in the cryptocurrency markets.
You won’t necessarily have to venture into any of these platforms if you simply want to buy bitcoins, but if you want to build a diversified portfolio or actively trade, you will certainly have to experiment with various different platforms. Hopefully, with my help, you should now have, at least, some idea about what’s out there.
If you liked this article, you should definitely check out some of my other work on the website. We do our best to make sure each and every article will help you better understand the cryptocurrency ecosystem and make educated investing decisions.