An exchange for cryptocurrencies, binary options of fiat currencies, stocks, equities or etc. is exactly what it sounds, a platform where users can exchange a unit for another. Basically, it is a trading spot – you buy something and then sell it. So far, so good. But after the initial idea came up, exchanges have been upgraded to a complex system for operating financial instruments. After you open an account there, you bid on the prices (simply put, to predict their prices), to short a certain market (to sell a borrowed entity), to exchange currencies one into another and to make a profit out of the difference in price. That comes from the money’s volatility – its price fluctuates due to changes in the peg (could be the price of a barrel of oil, for instance) and respectively, when you buy a coin at a certain price and that price goes up, you win. If it goes too low, you lose.
It sounds like a risky business, but it is a huge industry, which, if played well, might bring a profit of 10% or even more. That is how all those people got rich with Bitcoin.
Some exchanges work with fiat/ crypto couples, whereas others aim to keep it crypto clean with only crypto pairs. Prices of a coin also vary: marketplaces are not connected to each other and decide by their own how to rate a token. Usually, there is also a trading fee, which is a sum you pay to the platform for using their services.
One thing is for sure: you need to learn how exchanges work, in order to start trading.
For that, we recommend starting with our Complete Crypto Trading Guide. Also, check out Top 10 Basics of Crypto Basics, 3 Biggest Mistakes in Trading Everyone Makes and the Blockchain Key Terms.
A good source for a trading education is this one, which totally gives you the basic knowledge you need.
This lady over here explains carefully, step by step, how to proceed on an exchange platform.
*Video content posted on Crispybull is under the Creative Commons License. Credit goes to The Daily Decrypt.
