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Phemex Blog
Phemex Crypto Blog: Learn the latest news, updates, and industry insights on bitcoin futures, bitcoin trading, crypto derivatives exchange, and related blockchain technology.

Crypto Brokers: How do they differ from Crypto Exchanges?

What is a Crypto Broker?

A crypto broker functions as a middleman between those who want to buy or sell crypto and the exchanges that offer these services. Brokers can be individuals or companies that take your funds and place orders on your behalf on select exchanges, or they can be brokerage platforms that offer crypto purchasing and selling services. Using a brokerage platform has the benefit of removing the uncertainty of whether orders will fill as transactions execute immediately at prices set by the platform. In other words, you are not bound by the actions or preferences of other traders in the market.

what is a crypto broker

Why use a Crypto Broker?

Crypto brokers are incredibly useful for both crypto beginners and those who want to participate in the action but do not have the time to place their own orders or to constantly monitor the markets. The role of a broker is essentially to facilitate cryptocurrency trading in exchange for a fee.

Some of the main advantages of using a crypto broker include:

  • Its is easier to both withdraw and deposit fiat currencies with a broker compared to an exchange
  • Many brokers offer market analysis services to help plan strategies
  • They are often regulated by financial authorities such as CySEC to ensure the relative safety of your funds

How does it differ from a Crypto Exchange?

Trading cryptos on an exchange is a hands-on exercise that requires you to actively select the right coins and execute transactions at the most profitable prices. You are constantly competing and interacting with other traders attempting to outperform you. Prices on exchanges are more susceptible to quick fluctuations. Brokers, on the other hand, set their own rates and are not able to easily change them in real-time.

The additional knowledge and skills required to trade on crypto exchanges are offset by the increased flexibility and freedom that this method offers. For this reason, it may be a good choice for those who plan to get into cryptocurrency trading for the long term. Skipping a broker and learning by yourself is the best way to become a more knowledgeable and proficient trader. Especially as you consider allocating more capital to cryptos, it is imperative for you to understand the risk and to have full control of your investments.

Some of the benefits of using a crypto exchange include:

  • You can be afforded a greater level of privacy as not all exchanges require KYC
  • You may be able to benefit from market fluctuations more by trading at market prices rather than at prices set by brokers
  • You have more control and flexibility in terms of the trades you make
  • You are able to switch exchanges and use different platforms based on your evolving needs

How to Become a Crypto Broker?

If you want to become a crypto broker yourself, you must know how to trade. It is important to be familiar with as many exchanges as possible and all of the services they offer. Depending on the service you wish to provide, it may be as simple as executing orders based on your customers’ wishes, or you may need to familiarize yourself with charts and trends in order to advise your customers on the best trades to make on their behalf. Either way, good knowledge of the cryptocurrency industry, trading, and all associated topics such Blockchain are going to be essential.

 


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