How to choose a PSP for crypto exchange: checklist & cryptotrading basics
Choosing a payment service provider is of immense importance for the proper performance of any business. And when it comes to cryptocurrency exchanges the procedure of choosing a payment gateway is even more vital. The reason is obvious — exchanges of such a kind won’t be able to function properly without a robust crypto payment gateway. A crypto-friendly PSP will not only ensure smooth payments and payouts processing but also represent a backing as a reliable partner.
For a user trading on a cryptocurrency exchange, it looks quite simple: a site with updatable information about rates, charts, order books for buying and selling coins. Depending on the exchange it can feature a market depth chart, additional tools, and indicators. The ability to quickly refill the balance and withdraw funds to a personal wallet is a must. Personal account with viewing trade statistics and the possibility to contact technical support is at a premium. But what are the crypto trading basics and how is the exchange structured and functioning from the inside? What is needed to ensure its stable and uninterrupted operation? Let’s figure things out in due order. After all, the interface is only a small component of the exchange.
Crypto trading basics explained
So, what is a cryptocurrency exchange? The general meaning says it’s a business that allows for trading digital (or crypto) currencies for fiat money or other digital currencies. Plainly, it’s a place of exchange where buyers and sellers trade cryptocurrencies or transfer and convert currencies from fiat to crypto and vice versa. But a crypto exchange concept can also be defined as:
- broker-dealers representing traders and trading on their own behalf;
- private traders who buy and sell currency on their accounts on their own platform;
- holders of large volumes of cryptocurrencies;
- issuers of their own currencies who trade on their own platforms.
Types of crypto trading
Basically, there are two main types that specify the temporal characteristics — long-term and short-term trading. These two types are further divided into a range of sub-types, based on trading strategies. They include automatic trading with the help of a bot, HODL-strategy (long-term holding of coins in order to sell them later at a higher price), impulse-based strategy (trading at the time of active market movements), scalping, news trading strategy, etc.
Basic rules for cryptocurrency trading
Here are the key points to follow:
1. Diversify. It is the main principle of risk management. Working with one, even the most popular exchange is a shortsighted and risky strategy, just as investing in only one asset.
2. Stick to a strategy. Do not be distracted away from the chosen strategy. Letting your emotions run away with you and jumping from one path to another increase the likelihood to get losses more than profits.
3. Do not take loans. This is not about margin trading, but about real loans — many traders take such steps, hoping to quickly reduce their investments and get more profit.
4. Analyse. Pay attention to not only technical but also fundamental analysis, so as not to miss the breaking point of the trend. Also, follow the political and economic news.
5. Minimise risks. It is imperative to use stop loss and take profit orders to minimise risks.
6. Don’t take chances. Rely on analytics and facts, rather than on intuition and luck.
Observance of these simple rules will significantly reduce the likelihood of your burnout in the first few days.
How to choose a crypto-friendly PSP for your business
In case you nurture a plan to run your own exchange, but not to trade, your primary task is to find a reliable payment gateway for your business. Frictionless payment processing is one of the crucial elements of the whole business scheme. Integrating a reliable payment partner allows for the quick processing of users’ funds. It also helps to avoid a number of fraudulent transactions. But not all payment processors are equally suitable for crypto exchanges. So, here is a short checklist of what criteria you should pay attention to while choosing a PSP for your crypto exchange.
- PSP fees vary widely between companies. Additionally, some payment processors build hidden fees into their contracts, so be sure you understand the contract you’re signing. In order to maintain competitiveness and gain profit, opt for the lowest transaction rates.
- Industry regulation. Be sure your payment processor is PCI DSS-compliant to safeguard your enterprise against cyber threats. Note that in some countries (e.g. the United States) federal laws do not require compliance, though many state laws do. Getting a highly secured payment gateway will protect your business and profit from fraudulent actions.
- Specific business needs. The crypto industry landscape is varied, diverse, and habited by users with differing needs. Be sure that a payment partner you opt for supports or allows for connection with diverse payment methods. It’ll help you reach more traders all over the world.
- Smart routing. A payment processor with this feature is a surefire way to increase your conversion rates. It will help each transaction be processed until its successful resolution.
- Type of integration. It can be fulfilled via API or HPP. Check which one better suits your enterprise.
Choosing the right PSP partner delivers you a bunch of advantages. Apart from the security of the data and funds, you get the ability to accept a range of payment types, including alternative ones. Implementation of these criteria helps you gain users’ loyalty and trust.
There are many factors to take into account when trying to discern which PSP to choose. But the core is as follows: countries it operates in, its technical aptitude, and the services it provides. Sure, there is one more factor that appears to be individual for each enterprise: different price tags for the services. And they depend not only on the depth of the offered services, but also on security, reliability, and establishment in the market.
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