It is not a secret that the crypto industry is one of the newest fields that we have today. However, it managed to make some crucial changes in the world for a short period. Even today, some people will tell you that digital currencies are a scam that will not allow you to make a profit.
We are not judging those people because all cryptocurrencies truly had a turbulent past. Yet, they should primarily get familiar with all aspects of the industry before making any conclusions.
Becoming a successful crypto investor is a complex process that lasts long. You will not succeed to get rich over the night. Before everything, you should understand that investing in banks and investing in digital currencies are two different things. Every move you make counts and the smallest mistake can potentially cost you a lot.
That is the reason why you should invest a lot of effort to improve your knowledge and skills. Doing that is possible in several different ways. First of all, you should improve your theoretical knowledge associated with the subject. Read different e-books and blogs that can explain to you everything you should know about different cryptocurrencies.
Despite that, learning from the mistakes of others is the less painful method to get some lessons. Fortunately for you, you came to the right place to hear common crypto exchange mistakes to avoid. As we previously said, even the smallest mistakes can negatively influence your profit. You should not be afraid of the risks that you will, sooner or later, have to take. That should only motivate you to invest more time in discovering new investing tactics and strategies. Be sure that all the effort you invest will pay off in the end.
Don’t Choose the Wrong Type of Digital Currency Exchange
We will start our list with the most common mistake that investors make. Beginners should know that there are three major types of exchanges in the world. It is crucial to understand the main differences between them.
The first type of exchange comes in the form of cryptocurrency brokers.
These exchanges will allow investors to purchase digital currencies through the DCE. Some people might tell you that the method like that is not quite safe. However, things are drastically improving in the crypto industry and certain regulations protect people.
On the other hand, you can exchange your virtual currency on different trading platforms. A good example of that is Kraken, Binance, Coinbase, etc. If you pick that method, we recommend you only trade on the most reliable platforms. They all ensure protection and we believe that feeling safe when trading is one of the goals you have.
In the end, you can also use the services that peer-to-peer exchanges offer. That type of exchange connects all buyers and sellers and allows them to collaborate directly. Both parties have the right to make decisions independently for each transaction they make. Many traders will tell you that these networks are safe and trustworthy.
Before we end this part, we would like to suggest one thing. The purpose of the article is to make things easier for you in every possible way. That is the reason why you might want to check Changenow.io. Beginners usually need time to understand how the entire exchanging process functions. The websites like the one we attached make all complicated things easier. Additionally, they do not require registration and the hidden costs do not exist.
Picking a New Crypto Exchange
It is hard to count how many exchanges in the world operate actively. You will truly struggle to pick the one that meets your requirements and expectations. They will all look the same or almost identical. However, the truth is, not all of them will offer you the best possible service.
Anyway, we will let you pick the one that seems like the best option. But, there is one simple thing you should be careful about. Choosing the new digital currency exchange would not be a good idea always. You can’t be sure if the exchange is quality enough until a certain number of people test it. Imagine that the customer service of the client you pick becomes unavailable when you need it the most. Despite that, it can also happen that the exchange inconveniences you by prohibiting withdrawals.
Both situations are something all investors would want to avoid. That is the reason why you should invest additional time to get all information about the exchange. Check the websites that offer that type of previews, read the news, and see if certain scandals are associated with a particular exchange, etc. Every piece of information that you can get counts.
Not Checking the Legality
We will continue in the same way. Don’t forget to check the laws and regulations in your country. After you do that, check if your potential “partner” is registered under the company act. Despite that, the crypto exchange should also possess all the necessary certifications and licenses.
The laws around the world are changing because of digital currencies. However, it seems that many governments still haven’t invested enough effort to make them suitable for all users. Don’t forget that some countries haven’t legalized crypto so far. Some insights show that the situation in the entire world is going to change soon. Yet, that doesn’t mean you should not be familiar with the law. Be sure that everything your potential exchange is doing is legal.
Not Confirming Liquidity and Volume
There is one thing that all beginners should know. Don’t ever forget that liquidity is the ease of selling and buying in the market. Let’s imagine that the liquidity is low. If that’s the case, you should know that number of sellers and buyers is low.
When we talk about cryptocurrencies, high liquidity shows that there is an ability to fill an investor’s order regardless of the period of the day. Despite that, it is also irrelevant how big or small the order is. To conclude, high liquidity ensures that you will find a better price and complete transactions quicker.