2018-8-30 15:42 |
Every day, millions of dollars exchange hands on crypto trading platforms. Most of these done by crypto traders who utilize crypto exchanges for their business activities.
However, that doesn’t mean that crypto trading on these platforms is devoid of its own problems. While the centralized exchanges typically handle huge transaction volumes, thanks to huge trade orders, decentralized exchanges cannot.
This is simply because of liquidity issues. For starters, high volume crypto traders prefer platforms with good liquidity, hence the attraction to centralized exchanges. They also prefer those with decent reserve, so that they can still keep trading even when trading prices crash.
The absence of this is partly why many traders routinely abandon exchanges with low reserves and a lack of liquidity for those with such assets. To be honest, the problems listed above aren’t the traders’ problems.
They are largely exchange management problems. They would have to figure out how to keep their reserves high and liquidity available. For the crypto trader, the following are real issues that they would have to tackle.
Price ManipulationSeasoned traders hardly ever fall for this, but beginner traders fall for it in huge numbers. This is because of their lack of experience and knowledge. Experienced crypto traders on the other hand, know how to spot these events and often either completely avoid it or find ways to profit from it.
In fact, it is the single biggest reason for severe price fluctuation in the crypto sector. Beginner traders can learn to spot them and take advantage of them by understand the difference between legitimate buy/sell walls and the false ones.
They need to study up on market orders and their functions as well as price manipulation strategies. Having a good grip on this subject matter will do wonders for your bottom line if you’re a beginner crypto trader.
This is particularly when you consider that traders routinely lose their shirts every day because they don’t know how to read these parameters.
Good news though, is they aren’t that hard to figure out. All it takes is a little reading up on the subject matters as well as learning the right strategies to avoid or capitalize from price manipulation events and you’ll be fine.
Trading With The Wrong BrokerageBecause crypto is hot right now, we’re seeing more traditional forex brokerages listing cryptos in their trade options. Unfortunately, beginner traders often have no idea of this particularly when the forex platforms say they’ve been in the business for years.
The problem with joining these platforms is that they aren’t often on the side of the trader. They are mostly set up to act as a counter to the brokerages who capitalize on the traders’ ignorance, and make money off them.
If you want the best crypto trading platforms, you need to go with traditional crypto platforms. These encourage an open market and are designed to traders to profit big time from their trades.
Traditional crypto exchanges are solely dedicated to crypto trades. Forex platforms only use crypto as an add-on. And because they’re not solely dedicated to cryptos, the priority for crypto traders isn’t there. In fact, support related issues are often prioritized in the forex first, crypto second order.
So, even though they tend to advertise very small initial capital investments, you should know that regular crypto exchanges do the same. You don’t need to have $1,000 to start trading on traditional crypto exchanges. You can start with as little as $100.
Coin ShillingFor those who don’t know what coin shilling means, it’s the simple process of hyping a particular coin using various means –news items inclusive- so that its price goes up and the schemers, profit from the shill. Coin shilling is incredibly rife in the industry and requires a little bit of experience to be able to identify shilled coins.
It’s easy for people to release fake news items about a cryptocurrency, get it to circulate and watch the price of their targeted coins rise or crash as the case may be. Fake news related to coin hype is a very big problem in the crypto sector, and one that the governments are trying hard to crush.
While the government is doing what it can, it’s going to take a while, seeing as these news items are often widely circulated on social media sites and community platforms.
Unfortunately, because people don’t bother with confirming or verifying these news items, they just repost or share –often with the best intentions of course- thus swaying investor and trader sentiments and trading decisions.
With such flawed trading premise, many new and beginner traders typically buy or sell on the basis of the shilling entities’ “recommendations. You need to be smarter than that, and learn how to verify the authenticity of every information you come across before executing any buy or sell orders.
More importantly, pay attention to other trading parameters. News items should not serve as the sole basis for your trading decisions.
Check out other parameters like community interest or sentiment, project progress, roadmap milestones, genuine new or upcoming announcements and so much more. Then, make your decisions based on a combination of them all.
Learn how to read all and utilize all these parameters when making your buying or selling decisions.
Too Many Scam ICOs And TokensIt’s been estimated that traders and investors have lost at least $500 million to scam ICOs and crypto projects between January 2016 and June 2018. Of the over 1600 cryptos listed on Coinmarketcap, more than half are scam tokens designed to enrich the founders and their cronies.
Until recently when the SEC started clamping down on and actively investigating ICOs, people were getting scammed every day by unscrupulous founders who launched multiple ICOs without any intent of ever fulfilling their promises.
As a beginner crypto trader or investor, the very first thing to lookout for is a guaranteed or promised return on investment. If any project offers that, run as far away from it as possible.
While you may be able to project profit margins over a specific timeframe, the reality is that they are mere projections. When it comes to crypto trading or investing, nothing is set in stone, no thanks to market volatility and uncertainty.
So, steer clear of mining investments and ICOs that have promise huge returns on investment. While some of them can be pretty rewarding financially, the majority of them are designed to trigger your greed and part you from your hard earned money.
As a rule, always investigate any intended project, ICO or crypto before investing in them. Due diligence will save you from losing your shirt.
Slow Transaction Wait TimesOne of the biggest challenges that crypto exchanges face is quickly onboarding new traders and investors. Thankfully, that’s quickly being resolved as exchanges are doing everything to ensure that new members can get started almost immediately they sign up.
Many traders often find transactions speeds slow on crypto exchanges. This combined with the high transactions costs, makes them unappealing to many traders who want their transactions cleared faster.
Decentralized exchanges seem to offer faster transaction speeds and lower fees, but have liquidity problems; which is why many high volume traders don’t use them.
While many exchanges have perfected the process of fast deposit and withdrawals, the reality is that smart traders simply set up reserves so they never have to deal with funding delays when they need to quickly get in on a trade or spot an opportunity.
If you prefer to go the instant funding route though, you might want to opt for the Gemini or GDAX trading platforms or peer to peer trading platforms like WallofCoins and Localbitcoins as they are incredibly fast at funding you.
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