Cryptocurrency Broker: Who is it and why do you need one?

A cryptocurrency broker is a service that acts as a middleman between buyers and sellers of virtual currency in exchange for a small commission. Services like this are ready to help customers at every step of the process: when they sign up, open a new account, deposit or take out money, put in an order, search for a partner, and learn how to trade.

Why Do You Need Cryptocurrency Brokers?

Direct trading on cryptocurrency exchanges usually comes with many problems. You need to learn about blockchain technology, a specific cryptocurrency, and how to become a trader.. If you want to trade more than one asset, you also need to learn about how cryptocurrency exchanges work (centralized, decentralized, and hybrid).

Another thing you need to do is sign up for an account on the site, go through verification, make a deposit, and learn how to use the interface for trading. Depositing and withdrawing money from an exchange account usually comes with a fee of 5–10%, depending on the method and financial gateway that was used to do so.

With a cryptocurrency broker, everything is a lot easier because it takes care of all the technical issues that come up when you interact with exchanges and cryptocurrencies. This makes you as a trader care only about the successful deal, everything else is done by the broker.

When you trade on cryptocurrency exchanges, you can only make money when the value of an asset rises. For example, if you buy bitcoins for $ 3,000 and sell them for $ 3,500 after a while, you can make money. If you work with a broker, you can make money even if the value of your stock goes down.

Currency Broker vs Currency Exchange

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

• The ability to profit from both bullish and bearish trends;
• On cryptocurrency exchanges, the ratio is 1:1000 to 1:100.
• High-quality tools for technical analysis and automated trading.

Trading with a broker is extremely safe. Trading platforms have a history of bringing themselves into disrepute. Everyone recalls Mt.Gox’s bankruptcy in 2013 and the subsequent blocking of BTC-e exchange accounts. In this context, brokerage firms that are regulated by law appear to be more trustworthy.

On the cryptocurrency exchange, users have to figure out how to make money on their own. Traders can get professional help and use tools like leverage, CFDs, and hedging on the broker’s platform.
While most exchanges allow traders to trade primarily through their websites, most brokerage firms also offer trading terminals with a wide range of technical analysis tools.

In addition, the number of cryptocurrencies represented varies. Brokerage firms typically list 10-15 of the most popular cryptocurrencies for trading, whereas major exchanges include hundreds of coins, including illiquid ones.

Benefits of Using a Crypto Online Brokerage

Leverage

This is a no-interest loan provided by the broker to the trader. The loan amount is calculated as the ratio of money on deposit to the loan amount. A trader only needs $100 to open a $1,000 position when using 1:10 leverage.

Most brokers provide this service, however most cryptocurrency exchanges, with the exception of Bitmex, Kraken, and Poloniex, do not. When trading crypto CFDs with leverage, you need to be extra cautious because it raises both profit prospects and potential losses.

Software and tools

When trading crypto through a broker, traders have access to a variety of risk management technologies and tools, such as stop loss and take profit tools. They can mitigate the risk of big losses due to the extreme market volatility.

Brokers, on the other hand, help you make better investment decisions and improve your overall trading performance because they have better charting tools and analytical support.

Trading speed

When you use the services of most brokers, you are not actually buying or selling digital assets; all transactions are completed in a fraction of a second on the broker’s trading platform. This gives you more freedom and helps you to react more swiftly to market changes.

This is especially crucial when trading cryptocurrencies, as confirming a transaction on the blockchain can take hours or even days, depending on the coin and network congestion. Traders will not be able to profit from the rapid market movements as a result of this.

Types of Cryptocurrency Brokers

All cryptocurrency brokers can be divided in two conditional groups:

• Market makers. They create dealing centers that offer “artificial” prices for over-the-counter trading. Such companies earn on spreads and playing against clients.
• Brokers providing direct access to trading platforms. These platforms send orders to liquidity providers (banks, investment funds, other brokers) that have direct access to cryptocurrency exchanges.

Best Cryptocurrency Brokers

Cryptocurrencies give you a unique chance to significantly boost your money, and this is a good thing. If you want to profit from any rate change, rather than simply waiting for the purchased asset’s price to climb many times over, you cannot do without the assistance of brokers.