Cryptocurrency warning: The 'biggest red flag' to look out for when choosing broker

Cryptocurrency: Expert on how financial system is being ‘remade’

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Cryptocurrency has grown in popularity in recent years and more and more people are interested in investing in the digital currency. But cryptocurrency can be volatile, and it is important to have the right information and guidance when making transactions.

Using an online crypto broker is one potential way of reducing the risk attached to cryptocurrency investment, especially for newcomers.

The experts at BrokerChooser have put together their top tips for finding the best online crypto broker.

Ensure they have a wide crypto selection

“The most highly regarded digital assets such as Bitcoin, Ethereum (ETH) and Litecoin (LTC) are widely available on most brokers and crypto service exchanges,” they said.

“However, there are smaller digital assets that may not be available in most broker product selections.

“Due to this, if you’re serious about getting into trading crypto, it’s crucial to know which crypto assets each exchange / brokerage offers and weigh these up against your wants, goals and needs.

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Bitcoin

Cryptocurrency trading can be risky. (Image: GETTY)

“For example, crypto exchanges have massive, real coin selections, but on the other hand their safety is questionable compared to brokers.

“Brokers may offer a safer way to speculate on price movements, however their crypto ETN / CFD / ETF selection may lag behind.”

Check for credibility, reliability, safety and experience

“The crypto currency space is largely a brand-new industry that is rapidly changing and not really subject to too much regulation.

“It’s important to check the credibility, reliability and previous experience of the exchange before jumping in.

“There are two ways to trade crypto – either straight on a crypto exchange, or through a broker and a stock exchange with products specialized to follow crypto price movements.

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“Just because it’s a new industry doesn’t mean there aren’t experienced, credible brokers providing alternate products to speculate on price movements.

“You can find reviews from a wide range of digital asset brokers on the BrokerChooser website.”

Make sure they have an easy-to-use trading platform

“In a similar way to other financial assets, trading cryptocurrencies is more seamless with an easy-to-use trading platform.

“Therefore, it’s good to go with a broker who has a full featured platform that is easy to use and that you will understand how to navigate.

“You need a trading platform that helps you manage your investments easily and provides you with useful information and insights to your digital assets detailing fees, trading history, active positions, and current results.”

Crpyto

Which countries have the most crypto ATMs. (Image: Express)

The sign-up process, commission & fees

“The sign-up process can tell you a lot about how a brokerage will operate.

“It may be hard to tell initially what you should look out for in the sign-up process, but as you get to know more about the industry this will become second nature.

“Perhaps the biggest red flag to look out for is the request for a large deposit without any alternatives (e.g., different accounts with smaller minimum deposits).

“Some reputable brokers providing cryptos ask for little to no money to sign up. This of course doesn’t mean of course that brokers asking for a bigger minimum deposit aren’t reputable.”

Crypto 2

These tips can help choose a crypto broker. (Image: GETTY)

Look out for CFDs

“Some brokerage portfolios contain or specialise in CFDs (contract for difference). These are complex and very risky instruments, thus not suitable for everyone.

“You can easily lose your invested money when you trade these products because of mandatory leverage.”

Assess your needs

“It’s important to write a list of what you are looking for by getting into investing in digital assets so you can find the right fit for you.

“Everyone is different and there is not a one size fits all approach when it comes to trading in cryptos.”

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