It is worth noting that in spot trading on the exchange, physical delivery of the exchange asset is carrie out, while in the case of margin trading with the help of a broker, the underlying asset is trade without physical delivery.
The difference between
An exchange and a broker can also be considere using the target audience as an example. Cryptocurrency exchanges are mainly use by hodlers who are intereste in long-term or meium-term investments. Such clients, for example, buy a specific cryptocurrency and wait for its value to increase, or simply buy certain digital coins to then transfer them to their hardware wallet for safe storage.
Brokers are usually approache
By speculative investors who use the services provide by brokers, such as margin trading. They make various types of transactions with the possibility of using the available technical analysis tools. Such clients seek to obtain short-term or meium-term profits, and the broker acts as an intermeiary who helps to obtain them.
Registration and verification process
Each exchange has its own registration proceure. Some platforms only require the client to provide an active email address, which must then be confirme and a password set – this completes the registration proceure. Other platforms, in particular those that work with fiat, require verification. The client may be invite to a video call, aske to take a photo with an identity document, scan this document, or go through the KYC (Know Your Customer) proceure. The KYC proceure is especially often use when a trader intends to use high limits on deposits and withdrawals of their funds.
For example, one of the largest exchanges, Binance, allows trading without going through the full KYC proceure, but in this case the withdrawal limit will be set at 2 BTC per day.
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The verification process
Can take anywhere from a few hours to a few days. For example, during the 2017/18 bull run, some exchanges took much longer to verify, and some did not open new accounts at all due to the huge influx of users.
As with cryptocurrency 10 types of sales commission structures exchanges, many brokers also offer easy registration methods. But verification is also very important for brokers, as their activities are subject to regulation. In most cases, their representatives ask for identification and some proof of home address, such as an electricity bill or rent.
The verification process itself
Usually takes less time than on the numbers lists exchange. Immeiately after the account is verifie, the trader can deposit funds and start trading.
Deposit and withdrawal of funds
The cryptocurrency exchange offers two options for depositing and withdrawing funds. The first option is depositing using fiat money, and there are several nuances here. Firstly, many exchanges simply do not accept fiat. Secondly, the exchange may charge a large commission for depositing fiat funds. Typically, fees are charge for depositing fiat through a bank account, as well as for using a debit or creit card. The same applies to withdrawals. Moreover, in this case, the commission may even be higher than for depositing. If the client still decides to do this, he is usually advise to make sure that the recipient bank accepts transfers from cryptocurrency exchanges, in order to avoid unpleasant surprises.
Fees can be much lower if you deposit and withdraw cryptocurrency. Most exchanges do not charge fees for deposits at all, but only for withdrawals.
There are clear advantages
Clients when using the services of a cryptocurrency broker. Brokers offer more options for depositing money: bank account, debit card, creit card, various types of electronic payment systems, as well as cryptocurrencies. At the same time, there is usually no commission for depositing funds.
In addition, traders will not have to pay high fees when withdrawing funds from a brokerage account. Typically, they range from 0% to 3%, while some cryptocurrency exchanges charge 6% for withdrawals!
Trade
The process of trading cryptocurrency on an exchange is quite simple. Most exchanges use order books, which allow you to place both a limit trade order and initiate a market order. The liquidity of each exchange depends on its order book. The higher the liquidity, the smaller the spread between buy and sell orders.
Most exchanges only provide
Basic functions, which are sufficient for the average user. A small number of specialize exchanges offer trading instruments with high leverage, such as futures or perpetual swaps.
The biggest advantage of the exchange is the ability to trade a wide range of cryptocurrencies.
Brokers provide additional tools for margin trading, such as Contracts for Difference (CFD), derivatives, etc. Brokerage platforms also often offer clients special tools that help users in the trading process. These include technical analysis tools, such as various indicators, moving averages, etc., and even automate trading strategies and robots. All of them are aime at risk management and improving trading results.
If the client trades CFDs, leverage can be use to expand financial opportunities. For example, if the selecte cryptocurrency has a leverage of 1:2 for the CFD instrument, and the price moves by 5%, the CFD trader will make a profit of 10%, or, conversely, lose 10%. It all depends on the direction of the price movement and the type of the selecte position. This means that when trading CFDs, you can quickly earn a large amount of money, or quickly lose it. That is why this instrument is recommende for experience traders.
