Using An Exchange
What Is An Exchange
An exchange is a place where traders go to buy and sell a certain set of assets. In this case cryptocurrencies. Traders want to all go to the same place (with the best fees/features) in order to have a large liquidity pool so they can trade quickly and easily (wanting to buy a million dollars worth of something when there is only half a million available on the exchange won’t bode to well).
Be careful, exchanges are centralized so they make themselves open to attack and exchanges have been hacked in the past and lost customers’ money. This is why it’s important not to keep everything on an exchange. Keep what isn’t being traded off the exchange in a personal wallet. That is a much smaller target than an exchange.
An active email address that can be verified is needed log into most exchanges. Confirmations and various notifications are also sent to this email.
Picture Of An ID Card
Depending on how much is being traded a user may be asked to submit copies of government ID. Exchanges have to do this by law.
Funds from outside the exchange are needed to trade. An existing fiat bank account that can wire money to the exchange, or existing cryptocurrencies already owned.
Having access to a large pool of funds so your trades get filled quickly
Being able to buy and sell many different cryptocurrencies in one place
Having a support team there in case something goes wrong
Pros and Cons
The exchange can run off with Monero or personal information
The exchange can be hacked resulting in loss of Monero or information
Financial activities are more easily monitored by third parties
Different Features Of An Exchange
The trading pair represents the two currencies that are being traded. The second currency listed is the “base” currency. The base dictates what currency pricing is in.
If Canadian dollars is the base (X/CAD) that means that the prices are in Canadian dollars. Whether it’s BTC, XMR, USD, or pancakes, the price will always be shown in Canadian dollars ($x.xx)
If BTC is the base that means that the prices will be in BTC. Whether it’s XMR, ETH, or cookies the price will Bitcoin (x.xxxxxxxx BTC)
BTC/CAD – Bitcoin Priced in Canadian Dollars
ETH/XMR – Ethereum priced in Monero
USD/EUR – US Dollar priced in Euro
The price chart is most likely the most prominent thing seen once logged in. The most common type of chart shown is a Candle Stick chart (pictured right). This will be just quick overview of the candle stick chart. The chart to the right is set to the 1 Hour scale as noted by the 1H selected at the top.
Candle – Each candle represents one unit of time that has been selected.
Wicks – The thin ends of each candle. The wicks indicate the high and low for that time.
Body – The thick part of the candle, it represents the open and close of the selected time. If the candle is green that means the hour closed higher then it opened. If it’s red it means the hour closed lower then it opened.
This is where the trades that are currently waiting to be filled can be seen. The pair in this case is XMRUSDT so that means Monero priced in USD.
The order book on the right shows traders are asking a total of 3340.59 USD for 49.894 XMR at a price of 66.95 USD per XMR. If someone wanted 1,000USD worth of Monero their order would be filled at the lowest offered price. However, if someone wanted to buy 5,000 USD they would have two options: Buy everything at the cheapest price then the rest at the new lowest price until their order is filled. Or buy everything at the cheapest price and leave the rest as an order yet to be filled at the same price. The first option would get XMR faster but would also drive the price up.
The order form is used to input whether a trader wants to buy or sell regarding the pair they are looking at.
The open orders section shows which of your orders are still in the order book waiting to be filled. Canceling a trade will only cancel the part of the trade that has yet to be filled by the market.
Showing you your order history for your notes and for troubleshooting. Most exchanges will also give the option to export your trade history for your records.
If all this seemed a little confusing that’s because it is. Exchanges will become more familiar the more you use them. Re-read this a few times while looking at different pairs and different order books to learn how to apply the terms and knowledge properly.
Traditional markets operate in a similar manner to Monero exchanges, don’t be afraid to turn there for help with certain concepts. Follow the button below for steps on how to execute a trade now!