Cryptocurrency exchange is a place where people all over the world can trade digital currency and crypto. It is like an EBAY, but without the physical goods. On a crypto exchange you can buy different types of cryptocurrencies, sell them and exchange them for fiat money (for example USD or EUR). Each exchange has its own cryptocurrencies listed, so if you are interested in investing in many of them, you might need more than one account. An easy way to check which crypto is listed where is by going to Coinmarketcap, clicking on the currency of your choice and choosing “market”. It will list you all the available places.
At a crypto exchange you can set up the price you are willing to sell and to buy for, and this is what drives the price up and down. Imagine if 20 people decide that they want to sell DESO for 300 USD, but the buyers are only willing to buy for 100 USD. Someone in the group will need to adjust the price, or meet somewhere in the middle. If there is nobody willing to sell for 100, the buyer will need to raise the buy price until a sale is finally made.
The main reason to use an exchange for crypto is to avoid exchanging with traders directly, as it is dangerous and you can easily get scammed . This way you can be sure to receive your funds without any issues. Just always make sure you are using a service that is well known and trustable. Here is a list of trustable crypto exchanges: Binance , Coinbase, Bittrex, Huobi and Blockchain. But before you start to trade on an exchange, there are a few things you need to understand:
What are order books?
Every exchange has order books where you can see the current buy and sell prices and amounts. The list of green amounts is how much people all over the world are willing to buy (the bit price) the cryptocurrency for, while the red amounts show the amount the sellers are willing to sell for (the ask price).
How to read graphs?
The crazy looking graphs that you can find next to each cryptocurrency on exchange sites show the movements of the prices. You can set up the chart to show weekly, daily, hourly and even minute changes just to have a good picture. The data helps traders decide whether they should be buying, selling or continuing to hold. If you would like to know more about graphs, the best place to look is youtube. For example this guy.
How do you buy and sell?
There are a couple of ways to buy and sell on an exchange and we will cover the most popular ones below.
Market orders
Market price is the most recent price at which cryptocurrency has been traded. If you use this method to buy or sell, the transactions will execute the fastest at the current price. If you are ok with the market value, then use this option for a very quick transaction.
Limit orders
Limit order will let you set up the minimum or maximum price at which you are willing to buy or sell. Such a transaction might take a while to execute, but is usually worth the wait.