Crypto Trading Platforms: How to Succeed

The differences between traditional and crypto trading platforms,plus tips for trading wisely

Mar 22, 2023

When it comes to trading cryptocurrencies, there are many important factors to consider. In this blog post, we will cover the difference between traditional trading platforms and cryptocurrency trading platforms, we will also discuss some tips when it comes to trading cryptocurrencies wisely and for the best success.

TL;DR

Crypto trading platforms differ from traditional (non-crypto) trading platforms.
Differences between crypto trading platforms and traditional trading platforms include, but are not limited to, the types of assets traded, their use of financial intermediaries, market maturity, market volatility, market reach and market regulation.
To be a successful crypto trader, ensure to; research the market, start out small, choose a secure wallet and be aware of scams and security.

Terminology:

Financial intermediary: an entity, such as a bank or investment fund, that holds funds from lenders in order to make loans to borrowers.
Whale Investors: Individuals or entities that hold large amounts of cryptocurrency. Whales can often have outsized influence in the markets (which can have negative effects).

Traditional vs. Crypto trading platforms

Generally speaking, a trading platform software used to ‘exchange’ or trade financial assets. Traders use these platforms to open, close and manage their market positions online, through a financial intermediary.

Crypto exchanges differ from the traditional type of trading platforms, specifically when it comes to their use of financial intermediaries.

CeFi and traditional trading platforms rely on financial intermediaries such as banks and brokers to facilitate transactions, while DeFi trading platforms use decentralized systems and smart contracts to enable peer-to-peer transactions without the need for intermediaries.

A DeFi crypto trading platform still acts as a form of intermediary, but exclusively between traders.

Other differences between traditional trading platforms and crypto trading platforms include:

The type of financial assets that are traded, crypto trading platforms allow (primarily) the trade of digital assets, whereas traditional trading platforms allow the trade of many financial assets (for example, stocks, ETFs and derivatives instruments).
Maturity of the market, traditional trading platforms have been around for a lot longer than crypto trading platforms, making them safer regarding regulation and transparency.
Market volatility, when it comes to traditional trading platforms, they tend to be on the more stable side; large amounts of trading volume on traditional exchanges make them less vulnerable to ‘big fish’ traders. Sometimes newer, smaller crypto trading platforms have offer less liquidity (fewer buyers and sellers) and so can be more vulnerable to market volatility, and ‘whale’ investors.
Crypto can be traded on crypto trading platforms anytime and on any day, they are also available to almost anybody. With traditional platforms, trading is often limited to business hours and public holidays.
Traditional platforms have specific rules and regulations in place in order to protect users. Fees are also comparatively high. Crypto trading platforms are also relatively free from regulation (although this is rapidly changing).

Tips for trading crypto wisely

Start out small

When making early investments in crypto, start with relatively small amounts of money. Trading cryptocurrencies may feel exciting, however it is not an easy market to enter and the risks involved are pretty large.

The crypto market is volatile, thus, it is better to start small, and build up from there.

Choose a secure wallet

See our top 5 wallets comparison and how to choose one for more details.

It is important to choose a secure crypto wallet to ensure security and ease of access. Some secure wallets to look into if you would like to start trading crypto include:

Crypto wallets are generally described as either hot or cold. Hot wallets are linked to the internet, making them vulnerable to hackers. Cold wallets keep your valuables offline, which is generally thought to be more secure.

As long as you double-check the reliability of the supplier, a hot wallet should work if you only have a modest quantity of crypto assets and want rapid access. The best option for handling very valuable crypto is a cold wallet.

Research the market

The only surefire approach to succeed as a crypto trader is to do your research and familiarize yourself with the market. As many of the methods used to assess conventional financial markets do not apply to crypto assets, trading in this market is not an easy process. Because it is mostly speculative, it is quite difficult to forecast how news and events throughout the world will affect the price of crypto assets.

Also, you need to exercise caution while following trading advice from other traders regarding crypto assets. Due to the nature of the business, many people are eager to take advantage of the novice investor.

Be aware

The cryptocurrency market is a perfect spot for con artists to operate because there is no central exchange and no oversight. Look out for fake wallets and exchanges as they are common. Malware issues and Ponzi Schemes are also common scams to look out for.