How to find an online cryptocurrency broker

Young woman sat at laptop by a window

Getting involved in the cryptocurrency market isn’t for everyone. The volatility alone is enough to scare off the most battle-tested investors. However, if you are someone who has decided that investing in cryptocurrencies is something you want to do, there’s still a lot of things you need to consider.

One of the most important decisions you’ll need to make is where to actually buy your digital currency. So I’m going to explore some ways you can narrow down the choices.

[top_pitch]

What is a cryptocurrency broker?

Much like a share dealing account that lets you buy and sell stocks and shares, a crypto broker works in a similar way.

They are basically platforms that bring together buyers and sellers. So owners of certain coins can sell them and people who want to buy them can purchase them. The broker or exchange platform will often take some kind of fee from the transaction.

Sometimes, instruments representing the digital currencies are traded rather than the actual cryptos themselves.

What are some tips for finding the right cryptocurrency broker?

The experts over at BrokerChooser have put together their top tips for finding the best online crypto broker. Here’s what they suggest you look out for:

1. Ensure they have a wide crypto selection

This is similar to what you would want with an investment platform.

Most cryptocurrency brokers will allow trading of the biggest coins like Bitcoin and Ethereum. However, if you’re looking for smaller digital currencies, not every platform will offer access.

So once you’ve researched which coins you’re interested in, check that the broker offers what you’re looking for.

[middle_pitch]

2. Check for credibility, reliability, safety and experience

The crypto market is still very new compared to most other asset markets. This means that things change at a rapid pace. Although regulation is beginning to catch up, it’s definitely not the most secure investing environment.

So extra care needs to be taken when researching places to buy or trade cryptocurrency. Trading can take place on a crypto exchange or through a broker that offers products that follow crypto price movements.

There are both credible and sketchy companies out there, so make sure you try to find the businesses that have an established reputation.

3. Make sure they have an easy-to-use trading platform

Cryptocurrency is confusing enough already. If you plan on buying or selling digital currency, the last thing you want is an overly complex platform that you can’t understand.

Not only will this make it difficult for you to figure out, it could end up costing you money if you don’t know what you’re doing. It’s really helpful to use a platform that’s simple to navigate, allowing you to manage your investments easily.

4. The sign up process, commission & fees

The joining process can often be a good indicator as to how the broker operates. It can be hard to separate good from bad brokers at this stage unless you have experience.

Be wary of any platform that requires you to make unusual sounding deposits. The commission and fee structure is also something you should look into. Each broker structures things differently, so make sure the platform you choose has fees that you fully understand before you invest.

5. Look out for CFDs

CFD stands for ‘contract for difference’. These are extremely risky financial instruments and if you don’t know what you’re doing, you could easily end up losing a lot of money.

They involve something called leverage, which means borrowing money. If you’re just starting out with cryptocurrency, steering well clear of complex trading methods like these will reduce your risk of making a costly mistake.

6. Assess your needs

Like with anything to do with your finances, finding the right broker is all about what suits you best.

It’s important to try and find a platform that ticks all your boxes; don’t worry about what anyone else says. Investing in crypto is very risky and can be complicated. So it’s worth taking the time to find the platform where you are most comfortable.

Investing in Cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in Cryptocurrency. Should you decide to invest in Cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.

The post How to find an online cryptocurrency broker appeared first on The Motley Fool UK.

“This Stock Could Be Like Buying Amazon in 1997”

I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

More reading

Leave a Reply

Your email address will not be published.