What is a Cryptocurrency Broker?

What is a Cryptocurrency Broker?

For Beginners
27.02.2020
Cryptocurrency Broker

As cryptocurrencies gained value, so did their trading. For a long time, those wishing to make money on digital assets were left to themselves. Not knowing the exact rules of the game, they went ahead step by step, learned from their own mistakes and gradually gained experience.

Others, having received bitter experience, left the market. Towards 2017, everything changed. A sharp jump in the value of top cryptocurrencies made brokers from traditional financial markets pay attention to them, and those who gained knowledge by their own labor began to help others earn money.

What is a crypto currency broker?

Crypto broker — is an intermediary platform with which you can conduct transactions for the purchase and sale of digital assets using special exchange instruments.

This is a kind of assistant in making transactions in the cryptocurrency market, but brokers charge a commission for their services. Instead, an easy way of trading is offered, which does not require special knowledge and skills.

The broker accompanies the trader at all stages:

  • opens trading accounts and cryptocurrency wallets;
  • helps to make deals for sale and purchase;
  • provides such instruments as leverage, CFDs, hedging;
  • helps in finding contractors.

Brokers provide their clients with a powerful analytical basis in the form of various indicators, statistics, technical analysis and ready-made trading strategies. The quality of this data significantly affects the success of cooperation with a particular broker.

The difference between a crypto broker and an exchange

We already wrote more about the difference between a crypto broker and an exchange here.

Let’s briefly describe the main points.

Brokers offered a trading arsenal that significantly exceeds that offered by the exchange:

  • the ability to make money on both bullish and bearish trends;
  • huge leverage of 1: 1000 versus 1: 100 on cryptocurrency exchanges;
  • quality tools for technical analysis and automated trading.

Trading through brokers is highly reliable. Over the past few years, trading platforms have repeatedly discredited themselves. brokerage companies that are regulated by law appear to be more reliable.

On a cryptocurrency exchange, users are on their own. A trader on the broker’s platform receives professional support and access to tools such as leverage, CFDs and hedging.

While exchanges offer to trade mainly through websites, most brokerage companies also provide trading terminals equipped with a huge number of tools for technical analysis.

The number of presented cryptocurrencies also differs. Brokerage companies often provide 10-15 top cryptocurrencies for trading, while on large exchanges up to several hundred coins are listed, including illiquid ones.

How to choose cryptocurrency broker for trading?

The brokerage company is your partner in cryptocurrency trading. It is very important not to make the wrong choice and start cooperation with a quality platform that can provide a high level of security and profitability of transactions.

It is recommended to start choosing a broker by studying reviews and blacklists. There are a lot of scammers in the cryptocurrency sphere, and if you are “lucky” to get on a “black” broker, you will receive nothing in return for the money written off.

When choosing a broker, you should pay attention to several important criteria:

  • Trading time. Not all brokers allow you to trade around the clock. Sometimes the time can be limited to weekdays or specific hours.
  • Short positions. The cryptocurrency market is highly volatile. The cost of coins can change significantly several times a day, so the trading platform must necessarily provide an opportunity to open short positions.
  • Commissions. Net profit is the amount earned, taking into account the deduction of commission. It is necessary to take into account the fees for deposit / withdrawal of funds, trading and maintenance of leverage.
  • Insurance. A good broker will definitely offer traders protection from negative balance and insurance.
  • Forecasting and training. Of course, only on the basis of advice alone is not worth risking money, but it will be very useful for novice traders to get acquainted with the opinion and experience of professionals.

cryptocurrency broker

How to make money?

Trading through a broker is not much different from trading on an exchange. It is necessary:

  • Register on the broker’s website.
  • Install a trading terminal from the broker’s official website.
  • Top up your account.
  • Make deals by selling cryptocurrencies for more than they were bought.

It is important for a trader to learn to understand the charts, indicators and quotes that the terminal will provide him with.

This may take some time. You can practice making transactions and working with the terminal by opening a demo account. Most companies provide this service.

How much can you earn?

A trader’s earnings depend on the amount of his trading capital and the ability to manage it. The price of coins can rise and fall by tens of percent. It is only important to correctly seize the moment and make a good deal.

It is worth noting that thanks to brokers, namely high leverage and minimal spreads, you can make good money even with minimal deposits. For example, if under normal circumstances, relying only on his own capital, a trader could earn only 10 USD, then with a leverage of 1: 100, earnings can be 100 USD.

Benefits of trading with brokers

If we compare trading through a broker with trading on a regular exchange, then we can highlight several advantages in favor of the first:

  • high level of transaction security;
  • the presence of a single trading platform that allows you to trade many assets at once;
  • the ability to reduce the size of the start-up capital without sacrificing profits, thanks to leverage;
  • advanced trading tools for deep technical analysis of an asset;
  • support and training.

In simple words, a cryptocurrency broker is a company that will help you enter the world of crypto trading with minimal risks and investments, teach you how to trade and insure against the negative. This is an attractive solution for both beginners who need support and training materials, and for professional traders interested in market analysis tools. In addition, cooperation with brokers is often accompanied by additional bonuses, for example, an increase in the deposit and additional earnings on loyalty programs.

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