FAQ: everything you need to know to the beginner about cryptocurrency exchanges

The crypto currency exchange is the natural habitat of the majority of investors and traders in digital assets. According to Coinmarketcap, their number has already exceeded 15 thousand and continues to grow every day. Today we will try to guide beginners in the basic issues of exchanges. Then they will finally be able to buy a Lamba in the following Bollene.

How the cryptocurrency exchanges work?

They allow you to exchange one cryptocurrency to the other (or Fiat), and also buy and sell coins.

The crypto currency exchange to set the price as crypto-currencies and tokens. The price depends on the actions of buyers and sellers and they depend on a very wide range of factors. For example, from the technical capacity of the asset, possible manipulation in the market or even pressure from financial regulators. Other factors are introduced in this article.

Different trading platforms have different options and functions. Some of them are made for traders, immediate exchange of Fiat to the crypt. For their functioning of the crypto currency exchange take a Commission from each transaction and withdrawal of coins to the purse.

In General, they operate on the principle of traditional stock exchanges. However, the crypto currency exchange is available for use 24 hours a day, seven days a week. Stock exchanges are intermittent.

How to construct a trading pair of currencies?

Trading allows you to capitalize on the changing courses of the cryptocurrency on a volatile market.

Remember, the right currency in the trading pair is very important. For example, if you feel that Bitcoin will rise against the dollar in the near future, you should buy BTC/USD. Conversely, if the main crypto currency will fall, you need to buy USD/BTC.

This rule applies to cryptocurrencies. By the way, some of the exchange does not trade Fiat, and only offer the pairs to the crypt. For example, BTC/LTC, BTC/ETH and so on.

Why do different exchanges have different price?

Because they are completely unrelated. The prices depend only on the strength of buyers and sellers on each platform.

Each exchange determines the price of an asset by taking into account the trading volume, supply and demand of their clients. That is, the more exchange, the more “authentic” the price of the asset it establishes.

Image source — GoBankingRates

There is no such thing as “stable” or “fair” price of Bitcoin or althena. Their value is always determined by the market. To simplify, many news services (Google one of them) use aggregate price to the digital asset. Most often it is calculated as a cross between several major exchanges.

Can I get profit from the price difference on the exchanges?

Yes, but only if the difference is more Commission trading platforms.

Take for comparison the price on five popular Bitcoin exchanges. During the day you will notice the difference in 1-2%. In the days of active trading it can even reach five percent.

If you are going to sell their bitcoins on one exchange at a higher price and buy more at lower, consider all expenses on the fee. Usually, these manipulations are not worth the result.

This method of earning is called arbitration. Now to do it manually is a waste of time. All a long time ago automated trading bots that are constantly perepechay cryptocurrencies on different exchanges. By the way, thanks to the arbitrage price of the digital asset on the stock market is about the same. Arbitration brings demand and supply are no related exchanges.

I want to start trading crypt. Where to start?

For a start, buy a few coins.

To trade need the money. Most exchanges will not accept Fiat in its purest form — in the account of the trader are stored cryptocurrency and stabilini (as an alternative to the Fiat).

Image source — Bitcoinist

The most famous service for the purchase of crypts is LocalBitcoins. Note that Russia is one of the biggest markets of the service. After the transaction you can safely get the coins on one of the exchanges. Also don’t forget to use our guides for traders.

Instructions for the purchase of crypts for example exchange Cryptopia described here.


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