One of the great things about cryptocurrencies is that you can easily purchase and sell them without going through a central bank. There are fewer middlemen involved, and likewise, fewer fees and other charges.
However, as trading crypto becomes more popular (and mainstream), it should be no surprise that brokers specialising in trading these currencies will become increasingly prevalent. The number of such brokers worldwide is currently on the rise – especially those who allow Australians to trade with them. As such, choosing the right broker for you could become more critical than ever before if crypto honestly does go mainstream.
Make sure that any broker you choose is legitimate; that they’ve been in business for at least five years. Once you find the right broker, how should you choose the best one for your needs? What are the characteristics, factors, and rules you should be looking out for in a broker?
Simplifying the process
Keep in mind the more ‘into’ cryptocurrency you become, the greater chance there is of being exposed to numerous trading risks. That’s why only those who are sure that they’re ready for this kind of exposure should go ahead and trade via an online broker. Only do so if you have been involved with cryptocurrency from the very beginning!
In addition to this, look at whether or not a broker offers margin trading. This allows investors to borrow additional money from a broker to increase their overall exposure when placing a bet or investment. In other words, it means you can potentially put up less capital of your own to invest in any cryptocurrency you want. As much as 0% margin trading is available with some brokers; other online trading platforms are more selective regarding this feature. Before committing funds to them, you can check out the full range of features any broker offers in their promotional material or website platform interface.
Choose based on their geographical proximity.
Some might choose a cryptocurrency broker based on their geographical proximity. For example, if an investor lives in Australia but wants to invest in Ripple XRP, you should choose only a broker with access to that particular currency. Global brokers are not always easy to find – but you should be able to identify a broker’s ‘geographical strengths’ in their promotional material.
Always check the minimum deposit figure any broker is asking for. It isn’t always going to be transparent in promotional material or on a broker’s website.
Brokers that set higher minimum deposits are likely those that have more legitimacy as an online trading platform and systems and support teams that can cope with more significant amounts of transactions per day.
In addition, make sure the amount of cryptocurrency you can purchase using a broker’s platform is in line with what you want to invest.
Do your research before committing any funds! You should always look into any broker you plan on using thoroughly to ensure that it’s the right one for you. Luckily, there are plenty of resources online which will provide some guidance on this topic.
Another good way to judge a broker’s legitimacy is by checking how transparent they are about their trading fees. If you see an online trading platform offering any kind of fee-free deals or ‘no deposit’ deals, then it doesn’t necessarily indicate that they’re brokers operating illegally in Australia. They might be legitimate brokers who want to entice new customers to try out their services!
On the flipside, brokers who offer attractive investment deals without information about costs or commissions could be operating illegally. At best, this behaviour is unprofessional and unethical – at worst, it’s highly illegal!
While all brokers offer customer support in some form, it’s good to note that some are better than others. Therefore, if you see a broker offering customers full access to personal account managers or 24/7 live chat options, then be sure to make a mental note of them. This way, you’ll at least know which brokers are willing to go the extra mile for their customers – and which ones aren’t!