Cryptocurrency is not like normal currency. The name of it alone will tell you that. But as easy as it is to know this fact, it is an entirely different thing to understand it. That is the problem we are going to tackle today. If you want to trade cryptocurrency, then there are a few things you need to know.
First, you need to know what cryptocurrency is. But more specifically, you need to know how it behaves in the market. Whether you know how crypto works is not as important as what makes it valuable.
Second, you need to know where to buy cryptocurrency. That includes the exchanges that trade in cryptocurrency, as well as the apps used to access those exchanges.
And third, you need to know how to make trades with crypto as efficiently as you can.
Cryptocurrency is currency traded entirely electronically. It is not printed like normal currency—called “fiat currency”, like American Dollars. Instead, it is constantly tracked and traded by a series of connected applications called blockchain applications. This tracking prevents fraud and gives the currency value through that security, as well as its highly coveted tradability that makes it easy to use.
You see, one of the great innovations of crypto is that it takes hints from almost every type of security out there, from stocks to foreign currency to even commodities to an extent. This makes it easier to trade.
From stocks, crypto takes its ease of trading. Many people will find themselves introduced to crypto almost by accident. Lots of trading platforms give you crypto, and that crypto can easily be traded on those platforms. Most of the time it can be exchanged for money, but it can at least be exchanged for stocks.
From foreign currency, crypto takes its principles of exchange. Foreign currency is bought and sold as trading pairs. Crypto is not bought the same way, but similar calculus is used to evaluate trades in it.
From commodities, crypto takes a protection against inflation. The biggest factor in inflation is what a currency can buy. If supply lines are hurting, then currency is hurting. Crypto is used to buy securities more than anything, and supply lines only affect those indirectly, lending it durability against inflation.
With a basic idea of what crypto is, you can start to explore the places that it is exchanged. But there are two layers to this that it is important you get sorted out in your head.
The first layer is the crypto exchanges themselves. Think of this as the place where you do the actual trading. Most times, a crypto exchange will let you buy crypto. But that is not always the case.
In fact, while there are a lot of things that a crypto exchange can do, they rarely do all of them. The reasons are complex, as they usually relate to what markets they take part in, what securities they offer, and what regulatory bodies are supervising the trades that they facilitate.
But there is no accessing a crypto exchange without an app to go along with it. You might be asking: “What is the difference between the crypto exchange and the app that trades it?”
The answer is simply that while the exchange you are connecting to determines what you can trade, the app you are using to connect to it determines just about everything else. That includes the information you are supplied on how to trade, the interface you use, and the notifications you get on market action.
Since what you are able to trade on an exchange and the tools you use to trade it are both so important, some exchanges are going to be objectively better than others. And by “objectively better”, we mean “able to make you more money faster”. But which ones are the best? And how are the best chosen?
The best crypto exchanges are chosen by evaluating what they offer you to trade. Ideally, they will either or both let you buy crypto or transfer it in from other sources. But they can also let you trade crypto with other users on the exchange, or trade crypto for other securities like stocks.
The best crypto apps are chosen by how easy they make trading. However, that is a bit deceptive. Some apps are hard to use, but only because they offer tons of features. Things like charting and graphing tools for analyzing prices, or search tools for finding the right currencies and stocks to trade them for.
With all that in mind, let’s start by going over the best cryptocurrency exchanges right now.
Very few people are going to enjoy Robinhood being called the best crypto exchange. Robinhood is the most popular trading app in the world.
And the funny thing about popular things is that everyone hates them. Its former users hate it. Its current users hate it. And every so often, the SEC hates it too.
It is a victim of its own success. But we still have to admit it is the best. Why? Because it allows you to easily trade crypto for stocks and stocks for crypto. It also allows you to buy cryptocurrency directly, offering up tons of different currencies, and lets you consolidate currencies from various wallets.
This is a big deal. We mentioned early on how it can be easy to stumble into ownership of cryptocurrency. Well, the easiest way to get started in crypto is by opening accounts on wallets and apps that give you free crypto for signing up. They give it to you small, but it can add up after just a few.
The difficult part of making use of all that free crypto is that it is spread out over several different accounts. However, since crypto exists on the blockchain, you can pull the crypto from each account and consolidate it. Not all crypto exchanges allow for this, but Robinhood is one of them.
This combines with its huge market selection of both stocks and crypto to make it the best exchange.
So, if Robinhood is the best, why does everyone hate it? Part of that is the exchange being a victim of its own success. People see that it’s popular, so they form an opinion on it. But it is also a matter of what it gives you access to. Robinhood has one other security besides crypto and stocks: Options.
Options are an extremely high risk and high reward security. And Robinhood encourages you to trade them. But you cannot trade this security if you are dealing in crypto.
Perhaps worse is the fact that Robinhood’s hand holding is known to be overreaching at times. This includes turning off the ability to trade certain stocks and currencies if they become too volatile.
Most people who get into cryptocurrency do not want to use it as a way of cheating inflation, or a method of getting discounted stocks, or anything else nearly so elaborate.
For most, the goal is to buy low, sell high, and get rich. Doing so requires the ability to trade cheap crypto for expensive crypto.
You can’t do that on a platform that only trades in the most popular cryptocurrencies. To do that effectively, you need access to lots of crypto—as many different kinds of cryptocurrency as you can get.
That is what Coinbase provides. It does not have every cryptocurrency that has ever existed, but only because there is new crypto being released every day. What it does have is hundreds of different types of cryptocurrencies, as well as the ability to both buy these directly and trade them with users directly.
It is because of this that it is considered the hub of basically all cryptocurrency trading in the United States. This results in top-notch security, as well as a huge community of people to trade with.
This gives Coinbase access to two things you can extract value out of that few exchanges have:
1. Trust building. A consistent community means consistent interactions. And that means you can make multiple trades to build trust with like-minded users.
2. The “sales pitch”. This takes advantage of that trust by allowing you to communicate with the people in whom you have cultivated trust. This way, you can sell crypto you otherwise couldn’t.
In short, Coinbase offers a ton of different cryptocurrencies. This allows you to buy into an obscure currency right before it goes up in price, and then sell it for a more well-known currency. You can also trade in the opposite direction, using a well-known currency to buy those cheaper currencies.
The biggest issue, which you might have already noticed, is that trading for any other kind of security is nowhere to be found on Coinbase. It goes deep into crypto, but it does not expand into anything else.
This does mean that the site can go into nearly any country, since it doesn’t deal in regulated securities. That expands its user base, and while it does have good security, this expanded user base does result in a high probability of fraud. And yes, the blockchain protects against fraud, but the fraud that the blockchain protects against is more like identity fraud, not scams and tricky language.
When it comes to exchanges, there are few that have the breadth of Interactive Brokers.
They are a powerhouse in the trading world, sporting a huge community and an even huger access to various markets. But the word “various” is not descriptive of how much Interactive Brokers connects you to.
We are talking stocks, ETFs, commodities, foreign currency, and even things like options of CFDs. Naturally, this means a crypto exchange as well. Some of those securities, including stocks and commodities, are even tradable for cryptocurrency on their platform.
Interactive Brokers has been around longer than the other two exchanges by a wide margin, meaning that it has already laid a ton of groundwork for how trades are sought out and executed.
This normalizes the process of trading each security, making it far easier to work with. We would normally save that praise for talking about the quality of the app, but that will not be happening.
Interactive Brokers does not just have breadth. It has a dizzying depth.
The reason why we will not be talking about the quality of the app is that for all that Interactive Brokers offers, its own size and age are its undoing for many people. The experience of the exchange is limited by the app. A good example of this is how you both search for and execute trades.
On other exchanges, these two functions are linked. If you search for a stock, for example, when you find it, you are taken to a page where you can trade it. But on Interactive Brokers your search, analysis, and trading tools are all on separate web pages or app screens. This is not very easy to navigate.
The saving grace is that normalization we mentioned before. At the very least, you will not get confused on how to operate each trading interface between all these different securities. But that is hardly enough to bridge the gap that Interactive Brokers’ depth and complexity creates for many users.
This is a bit of an odd one. We will get what makes it so odd in the “drawbacks” section, but for now let’s talk about what eToro does right. Because the answer is nearly everything. At least a little.
What that means is that eToro offers everything an exchange should: It has a great variety of cryptocurrencies to trade from, as well as the ability to trade that crypto for stocks.
Those stocks are highly international too due to eToro being primarily a trading platform designed for Europe. This also means it has limited foreign currency functionality, and a few handy guides on how to trade cryptocurrency the most effectively that you can.
One bonus that it provides is copytrading. In the fast-paced world of cryptocurrency trading, this can make all the difference in the world. What it means is that you can set up your account to automatically follow the trades of a designated trader. This trader can be a famous person or another user.
This will allow you to follow the trades of a major corporation, or someone you trust if you want to get personal. You can set the bounds of how much or how little you want to risk relative to their trades too, meaning that you can limit yourself from going all in. Trust has its limits, after all.
So, what was that mysterious drawback we mentioned? It is actually related to the fact that eToro is focused on European trades. The app is not normally available to people from the United States.
You can use a VPN to get access to it, but even then you will have trouble making an account without identification or an address based in either the United Kingdom or European Union. You didn’t hear it from us, but their verification process is not too strict, so that is not the biggest obstacle.
The real result of this barrier is that an American trader is probably going to focus mostly on cryptocurrency trading. You can trade that crypto for stocks still, but you will have to do some complex manoeuvring if you want those stocks to become cash. Better that you manipulate it through crypto.
Now that you know the best crypto exchanges, let’s go over the best apps. This is a different metric entirely, as rather than looking through the exchanges with the best options, we will look at their tools and accessibility. But you might be asking: “How can an app make a big difference in what’s good?”
For that, we direct your attention to our comments on Interactive Broker’s app. Its exchange is great, but its app is so wrought with design issues that it is difficult for people to use. And if an app is difficult to use, it is difficult to make money off of. It really boils down to the different features an app offers.
If you have never traded securities before, then you probably think you do not need graphing tools. Lots of people on the outside of the securities trade do not think of them because they’re not intuitive.
And if we are being honest, there are some people within securities trading who openly scorn graphing tools. They think of the market as too chaotic to predict. But if that were true, then no one would make money off of it, and people do it all the time. No, a good app has good prediction tools.
Most people go into the marketplace with a pretty firm idea of what they want to buy. Even if they do not initially show up knowing what they want to buy, they will usually take a quick peek at the news or a forum that discusses these things and come to a decision about what “the play” is with their money.
But if you want to make a play other than what news and forums tell you to make, then you need to be able to search far and wide for the right security. Whether that is the right cryptocurrency, or the right stock. That means searching by name, by category, or even by reputation (though that is less common).
Of all the features, this is the most important, but the hardest to use. The reason is that it is almost impossible to innovate on how research tools work. Research is simply things like this very article: Experts chiming in on what they think is a hot commodity or a prescient prediction in the market.
These are important because they are the backbone of knowing what is going on in the market from a more learned point of view. But these tools are hard to innovate on because articles, whether they are scholarly or entertaining, are hard to read. Not everyone has the time or attention span for them.
With those three main features of crypto apps defined, let’s get into which apps are the best.
And already we have a different best app than the best exchange. It is not too different, however.
You can still buy a huge variety of cryptocurrencies and even still trade them amongst users. But what sets the crypto.com app above Coinbase’s is all of the features that we mentioned above.
The graphing tools crypto.com provides do a ton to help people not only predict price trends at higher levels but understand them as well. For instance, many people do not know the difference between linear growth and exponential growth. Knowing the difference, however, is instrumental to predicting long term changes, which in turn is a critical step in deciding among long term investments.
Crypto.com not only has graphing tools for that sort of thing, but explanations as to how to use them. This avoids the Interactive Brokers problem of giving tools that are too hard for most people to use.
Their search tools are great too. These sorts of tools are much more important for crypto than for stocks, as it is far more common to go in search of obscure cryptocurrency than it is to go in search of obscure stocks. Crypto.com lets you sort among new crypto, price changes, and many more metrics.
We saved talking about research tools for last, as that is crypto.com’s big weak point. On the desktop app it is not as bad, though there is a bit of an issue of their research tools not standing out. They mostly feature newer stories first, which means that it is easy to lose stories in the deluge of articles.
On the phone app, research tools are almost completely forgotten about. You can find them if you look, but they are usually linked to other websites, meaning you have to read them through the slow, buggy in-app browser provided by crypto.com. You are better off opening them in your own browser.
In addition to this, crypto.com is solely crypto-focused. You can navigate the app easily enough that it is a good way to make money off of crypto,
Crypto.com went deep on crypto, so it is only appropriate that PrimeXBT go wide instead. What does that mean?
Well, to begin with, it means you can trade crypto for commodities, indexes, and foreign currency. Not only that, but the app connects you to international markets, opening things up a ton.
Perhaps its most stand-out feature is its yield farming capabilities. We did not go over this in “features” since it is so uncommon and not essential, but yield farming is a great way to make money off of crypto passively while risking very little.
It works like this:
First, you offer up an amount of crypto to yield farm. When people trade crypto, they are usually trading “on margin”, meaning that to speed trades up they will trade with borrowed money for a portion of the transaction. They will pay a small commission fee to cover the cost of this, which is basically a loan.
Yield farming is when you become the person offering up that loan. It also means that you get a portion of that commission fee. The PrimeXBT app lets you do this on your mobile device.
In addition to this, you also get its above-average graphing tools. These are particularly impressive for how they measure the math of foreign markets, which can work slightly differently than American ones.
PrimeXBT is a newer app, meaning that it has less of a reputation to cover itself with. One notable omission among the securities it offers are ordinary stocks. It allows you to buy indexes—and not just that, indexes from all over the world—but not the individual stocks within the indexes. Why?
The answer has to do with the fact that they are international. Not all countries have the same laws for international trading. There are some companies and industries that are exceptional due to being multinational, and indexes of those companies are the indexes that PrimeXBT offers.
In short, while you can trade crypto for commodities and foreign currency, you cannot effectively trade them for stocks on the app.
And finally, we have a crossover—something with both a great app and a great exchange. But again, Robinhood’s reputation forces us to measure our words.
How good is its app really? How intuitive are its graphs, how wide are its searches, how deep are its research articles? The answer might surprise you.
Because honestly, the answer is that it is not amazing in any of these respects. But it is above average in all of them. But being second or third best in everything is all you need in an arena like this.
Robinhood does something that almost no other crypto app does: It keeps things simple. When we were explaining what crypto was before, we skipped over explaining exactly how it worked. That is because most people do not care. And not only that, for most people it does not matter. Yes, the specifics of how it works can help you find ways of making money off of it. But most of the time, it will not.
Robinhood focuses its efforts on getting to the point. Whether it is through its easy-to-use graphing, its intuitive search system, or its easily navigated research articles. It will not teach you how to do the math behind any of these things, but it will provide you the answer. For most people, that is enough.
Robinhood maintains all of the drawbacks we mentioned earlier. If we can add one more on top of that, let’s expand off of the “handholding” we mentioned. Robinhood’s research tools shine when you look at an individual stock, as it will provide news stories related to that stock. But elsewhere it is not as good.
For instance, the home page of its app presents the most recent news. But this news will just as often be for specific stocks as the stock market at large. Experienced hands in the market will recognize the damage this does to people’s view of the stock market on a conceptual level.
Basically, if all you see are news stories on tech companies, you might begin to think that the stock market and tech companies are intrinsically linked. This is a problematic view, as the stock market existed long before the tech boom of the 2000s. If tech went under, the stock market would survive.
Taken at face value, their research tells a very different story. Earlier, we described Robinhood’s process as giving you an answer without teaching you the math. This is the place where that hurts the most, as its answer in this case is the most consistently wrong.
Due to the nature of cryptocurrency trading, one of the most desirable things that an app can offer is trading without fees.
Remember, most people make money with crypto by buying cheap currencies and selling them after small appreciations in their prices. This can’t be profitable under large fees.
The problem is that most crypto apps have some sort of fee attached to them. Well, not Kraken. Kraken was founded to be a hub of decentralized finance trade. That means it prioritizes getting lots of cryptocurrencies in the same place and making them easy to trade. And you know what? It succeeds.
And not only that, but it makes going through these currencies fast and easy. Every trade is just a few button presses, and searching out one currency always brings a few more recommendations with it.
This ease of use combines with the lack of commission fees to make Kraken competitive with other crypto apps, simply by underlining the main way that cryptocurrency is traded to make money.
As good as Kraken is at amplifying the basics of crypto trading, it falls short in many other areas. It has basically no research to speak of and does not include trading of other securities at all.
This comes with its own advantages, but it makes it feel like it falls short in features compared to other products. It also means that if you are making money through trades on other platforms, you will likely not feel much of a reason to come to Kraken over staying with them.
That means Kraken is a great place for people working with bots or off small amounts of money. But it is not great for much else beyond that.
Now we know what crypto is and where to trade it. Obviously, it is a little more complicated than just knowing those things, but once you go to those exchanges and use those apps, you will feel a lot more confident in saying you understand what you are up against. But you still might not want to risk money.
What most people do is start with paper trading. This is an old trick where you give yourself an imaginary budget and proceed to make trades, keeping track of whether or not the trades were successes or failures. This will get you in the mindset for evaluating what works and what doesn’t.
But most importantly, it will get you researching the things that are informative and not informative.
Paper trading is certainly an effective teaching tool. But there is one thing that paper trading cannot teach: How to stomach risks. It can definitely teach you how to calculate risks and manage them—but it cannot teach you how to actually summon the willpower to take them. And all trades involve risk.
So, how do you make trades with confidence? How do you make trades that make money? That is a heavy question that people dedicate their lives to answering. But we can offer three pieces of advice.
Many people will laugh at this advice. And indeed, “win more” is certainly incomplete advice. But that is not what we are saying. It is not just about winning. It is about avoiding losing. If you make profits 51% of the time, you will eventually get rich. That is the advantage of taking things slow.
But the word “eventually” offends people’s egos. They do not want patience. They want a lottery ticket. So, the advice here is to not trade big and flashy. Trade so that you win more than you lose.
Imagine you make a bad trade. You buy crypto that falls rather than rising. Do you stay in, hoping it goes back up? Or do you quit before it ever recovers? The best thing to do is to quit sooner rather than later.
This is another piece of advice that is uncomfortable to practice. But the issue with staying in hoping things will get better is that it costs you in terms of opportunities. If your money is tied up in one investment, it is not being used to explore other investments.
If you are just starting out, do not look for the next Bitcoin. Do not stay invested in a currency expecting it to go to the moon. It is much better to buy a currency and then sell shortly after it increases in value.
This will ensure that you are getting something out of many small, fast trades. And yes, you will occasionally see the currencies you sell increase far beyond the price you sold at. But that does not mean it is wrong to play it safe. Better to get unlucky in that way than the other way.
Getting into crypto can be daunting. There is a lot to consider. But keep in mind what you want to get out of crypto. Most people just want to make money. Others see it as a creative way into the stock market. There is no wrong answer. Just have a plan, stick with it, and play it as carefully as you can.
The money will come to you if you let it. But if you risk it big, you are more likely to lose big than win.
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