Are you interested in trading Bitcoin, Ripple, Litecoin, Ethereum or other cryptocurrencies that have become so popular these days? When you are breaking into this market, it is vital to ensure that you hit the ground running. The fast-paced and volatile nature of these digital currencies means that you need to have a deep knowledge of what these are and also how they work. However, this is not enough because if you are going to trade these cryptocurrencies, you need a broker. You cannot break out into the markets if you don’t have a reliable and trustworthy broker to assist you.
For most people, this means that they select a forex broker that also allows its clients to trade cryptocurrencies via their trading platform such as the 4XFX trading platform. This kind of a setup might be appealing to some traders because it not only gives the traders options such as Ethereum and Bitcoin, but also provides access to other minor and major currency pairs. There are certain characteristics that make for a trusted broker and you need to look for them when you are considering your options. Listed below are some of the tips that you can use for finding a reliable crypto broker:
- Think of their reputation
When it comes to broker selection, reputation can be quite important. At the very basic level, you need to think about the reputation of the broker you are considering, along with the services they have to offer to you. Even though conducting thorough research can be time consuming, but it does pay off eventually because it ensures that you are able to partner up with a reliable broker that can offer you the services you are after. The best part is that you can do this research online these days, but you should definitely be aware of the credibility of all those who have provided reviews. Online forums are regarded as an excellent source of information, as they can give you access to the honest opinion of other investors and traders.
- Go over the user experience
During the course of researching and trying out different brokers, it is crucial for traders to find out what kind of user experience they can expect before they decide to invest their money into the platform. Nowadays, most of the brokers give traders the option of using practice accounts that can give you a taste of what to expect with the brokerage in question. When you are trying these out, make sure you go over the design they have. Is it easy to understand and navigate? Can you use it for making trades quickly? Are there any lags? These factors can be incredibly important in the long run.
- Regulation is very important
It is important to be aware of the fact that some brokers are regulated while some are not. In some situations, the broker is unregulated simply because no regulatory body exists in the country in which the brokerage is based. In other cases, regulations are imposed, but they might not be very strict. The staunchest regulations that are imposed on forex brokers can be found in the United States, but regulations are still evolving as far as cryptocurrencies are concerned so you need to pay close attention to them. Some other countries where strict rules have been established for brokers include Hong Kong, Australia and the United Kingdom. It is best to opt for a regulated broker because you know they will abide by a set standard of rules and are less likely to commit any scams or frauds.
- Look for convenience
Convenience also plays a very important role in the process of broker selection and it refers to accessibility. Can the broker be easily accessed round the clock? Is there a mobile app available? As far as cryptocurrency trading is concerned, mobility is necessary because the markets tend to move at great speed and you may want to capitalize on vital moments and news as they take place instead of waiting. Moreover, mobility also gives you considerable freedom because it means that you can make decisions whether you are sitting in front of the computer or you are traveling from work to home.
- Keep an eye out for competitive spreads
How do brokers earn money? They make their profits off the differential between the quoted asking price, the price paid by the client for buying into the market and also from the buy and sell price. This is commonly referred to as the spread. Spreads can and do vary for every broker due to which it is recommended that traders look for a broker that can offer them the best spreads on a whole. Cryptocurrency and currency trading both will be more profitable and effective when you are able to take advantage of excellent spreads. A number of brokers will straight out mention their spreads on the website whereas others offer free demo accounts that can be used for viewing spreads at any time.
- Leverage requirements should be on the list
There is a minimum equity requirements associated with every trading account. This amount will depend on your total investment and also take into account the amount you are planning to invest in every position. The equity amount is the same that is required for executing a trade. Most of the brokers out there don’t specialize in offering trade advice, but those that do give recommendations will tell traders not to invest more than 5% of their total equity in a single trade. If you have any queries regarding equity requirements, you can speak to the broker in question before you decide to open an account with them.
Leverage is a very sensitive topic and one that needs to be considered during the process of broker selection. This is due to the fact that leverage can provide a trader with the opportunity of increasing their potential profits. Essentially, it refers to a trader’s borrowing potential. These borrowed funds enable traders to increase their investment as a whole thereby giving them the opportunity of exiting a trade with as much profit as possible. However, a trader needs to exercise caution when they are using leverage because this can also lead to huge losses. Check out the minimum and maximum leverage levels offered by a broker before you make a choice.
- The availability of effective trading tools
Access to a number of tools is provided to traders when they are trading cryptocurrencies through a forex-style trading platform. These tools can make it easier to perform the fundamental and technical analysis process. A number of brokers tend to operate on the MetaTrader platform that has a large number of tools and features built in. It is advisable that traders look for a broker that can offer them real-time market information and data, access to current financial announcements such as unemployment, inflation and GDP numbers and news reports and also provides them with charting tools for conducting technical analysis.
There are also certain brokers that give traders the option of using some very unique features like Copy Trading or even fee-free services. Some of these features can make a world of difference in a trader’s experience, especially if they also include trend indicators and also an education center on their website. With the use of these effective trading tools, it is possible or traders to enrich their trading experience without having to pay for an excess service in order to get some assistance.
- Be aware of how to spot scams
Do scams really exist in the cryptocurrency market? Yes, there are more than a few brokers out there who have proven themselves to be nothing less than a money making scheme. These brokers are less than ethical and traders need to be on their guard during the selection process. In some cases, these scam brokers have even gone so far as entering into the same trades as their clients, only in opposing positions.
This has caused a number of traders to lose their money. Scam brokers have profited in these instances because they collect on the losing trade and also the spread. It is possible for a broker to manipulate the market as per their preference in the situation where a trade is contained solely to their internal trading program. This is an area where regulations can be imposed and are effective in preventing a broker from controlling and influencing trade outcomes.
- Be aware of the social elements
It is a given that social media enjoys a lot of power these days and this is one of the top reasons why more and more brokerage companies are integrating a social element in their trading platform. This is something that every trader needs to pay attention to when they are searching for a cryptocurrency broker. The ability to follow as well as share trading activities can aid traders in determining whether they are working with or going against the crowds. Furthermore, it also gives them the opportunity to learn a thing or two from popular influencers specializing in the cryptocurrency of your choice.
- Go over the deposit methods
What deposit methods are offered by the brokers you are considering? Do you have to give your personal details in order to deposit money into your trading account? These are two questions that you need to ask when you have to choose a broker. For most trades, cryptocurrency is an attractive investment due to the anonymity it has to offer, which means that the idea of providing your personal details for making a deposit or transaction can be a turn off for some traders. Nonetheless, there are some really good and reliable cryptocurrency brokers out there that offer extremely secure and varied deposit methods and it is recommended that you take a look at them before making up your mind about the broker to go for.
- Never forget withdrawal considerations
Dedicated exchanges are usually used for conducting most of cryptocurrency and forex trading. Those who are new to trading should be aware that forex trading is different from a regular cryptocurrency exchange in that the trades are completed in pairs and it is non-executable. This means that the cryptocurrency cannot be withdrawn directly, but some brokers do give traders the option of cryptocurrencies as a payment method for withdrawal. Just like forex trading, other factors will also have to be considered including the allowed contract size, the spread, swap fees, margin and more.
- Customer service should be a priority
Last, but definitely not the least, the quality of customer service offered by the broker should also be taken into consideration. Cryptocurrency exchanges are mostly open 24/7 and this means that traders need to opt for brokers who are available round the clock. These brokers need to have a competent and friendly customer support team or department that’s ready to offer their assistance and expertise when needed. It can be incredibly frustrating for traders to get stuck or have questions and no one to provide them with answers.
In case there is a lag or any other hassle, traders need to be able to reach out to the customer service representative quickly and get it resolved. Make sure the broker you are considering has a trustworthy and helpful team that can give you the assistance you need, whenever you need it.
In a nutshell, there might be plenty of ways that traders can use for examining a broker, but the ideal method is to take a look at their business reputation, the services they have to offer and the support they can provide. If these things check out, the traders can make a demo account as these accounts can give them a good feel of what to expect when they work with that trader. If the broker passes your test, you can deposit a small amount and test the broker out in the real market. Once you are satisfied, you can use that broker for trading numerous cryptocurrencies.