Whenever you enter into an online trade, there are certain rules and procedures in play. If you don’t abide by the rules or the conditions aren’t to your liking, then a trade can’t take place. Put simply, trading conditions form the basis of all activity in the crypto world, which is why you need to understand them before you invest.
What are Trading Conditions?
In simple terms, trading conditions are the rules that govern how buy and sell orders are handled on an exchange. Now, when you delve deeper in the nuances of these rules, you’ll see that trading conditions can be universal and site-specific. For example, any site licensed by the Financial Conduct Authority (FCA) must follow a strict code of practice. From having transparent rules based on objective criteria to not executing orders against proprietary capital, there are rules everyone has to follow.
Beyond these industry guidelines, every cryptocurrency trading site will have its own trading conditions. What’s more, these conditions may vary from country to country in order to satisfy local laws and regulations. For example, investors using British trading sites can only make deposits using certain banks. Conversely, for users accessing US crypto exchanges, transaction fees might be slightly higher.
Put simply, trading conditions govern how exchanges operate and, in turn, how you can buy Bitcoin et al. Without these rules, there would be no standards on which to gauge the quality of a site and, moreover, less protection.
Five Common Trading Conditions
Although there are dozens of crypto trading conditions, the most common are:
Country Restrictions: Certain exchanges are only available in certain countries. For example, Coinbase Exchange isn’t available in Bangladesh because of local restrictions. However, it’s one of the crypto sites you can access from India.
Fees: One of the defining features of any crypto exchange is fees. Part of a platform’s trading conditions, fees will vary for a myriad of business reasons. As a trader, you should look for low fee exchanges in order to get the best deals.
Lot Sizes: Just as exchanges set their own fees, they also decide how many units you can trade.
Payment Options: As the industry has evolved, the number of available payment options has increased. These are all tied up in a site’s trading conditions. For example, a PayPal exchange will typically have trading conditions more suited to casual investors.
Spread: If you’re using a crypto broker, spreads are the difference between an asset’s bid and asking price. Brokers such as eToro Trading set their own spreads, with the best ones keeping them as tight as possible (i.e., they keep the prices as close as possible).
Do Your Research
Unfavourable conditions can lose you money, you should always research your options carefully. Image: Rawpixel.com/Shutterstock.com
The reason you need to know about trading conditions is that they will impact your potential return rate. Basically, unfavourable conditions will cause you to leak money through fees, hidden charges, and missed opportunities.
However, what’s important to note is that a positive set of conditions for one person won’t necessarily be positive for someone else. Everything should be based on your circumstances. Therefore, before you start trading, it’s important to read our exchange reviews and get a feel for what’s best for you.
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