When I first started trading crypto, I was low maintenance. I traded on one platform with a focus on Bitcoin and Ethereum. I bought and sold on a whim, paying little attention to price and fees. Of course, I quickly tumbled down the crypto rabbit hole and began to care more about the things I considered more in my stock and options trading. Price is king in trading. Everyone wants to maximize profits and whether it be through set limits or managing fees, price is something that becomes more important as you grow from a crypto noob to a sophisticated crypto trader. In a matter of weeks from my first trades, I realized that I was paying way too much for my crypto.
I’ll start off by saying “paying too much” is misleading. As a trader, I only want to buy low. If I’m selling, I want to sell as high as Wille Nelson on a Wednesday. In building Voyager throughout the past year, we’ve worked hard to make purchasing crypto more affordable and efficient. Here are some of the inefficiencies that many crypto traders experience on a daily basis, forcing them to pay too much.
Any trader, seller, or dealer knows that the larger the marketplace, the more price competition there is. Due to the fast emergence of the crypto trading market, hundreds of exchanges now exist, each representing their own marketplaces of (what I call) “pocketed liquidity.” As I write this, Binance, the world’s largest exchange (in terms of volume) represents less than 2% of the overall market volume. This means that a trader on the largest crypto exchange is missing out on 98% of the overall market liquidity.
Having built a trading platform on top of a smart order router and overall best execution platform, I can attest that missing out on 98% of the liquidity means coins left on the table. By aggregating most of the popular exchanges and liquidity providers, Voyager is able to execute orders to a larger market and find a better price.
Paying the Tolls
If you’re an active crypto trader, you’re incurring fees more frequently than your average retail stock trader. The very nature of digital assets requires the crypto trader to take more severe measures in safeguarding their assets. “Don’t keep your coins on exchange,” my early adopter friends warned me early on. While there are many reputable exchanges with strong security practices, experience has taught us that even the most trusted exchanges are vulnerable to hacks and attacks. The more exposure that a trader has by managing their coins across multiple exchanges, the more risk they must be willing to accept.
I will not naively state that Voyager does not or will not experience threats. This is the nature of our business and the risk that we choose to absorb for our customers. We mitigate this risk through our best-in-class custody and security partners. Most recently, we announced our partnership with Ledger and their Ledger Vault solution, bringing an enterprise-level cold storage solution that allows us to hold the majority of our customers funds offline.
Voyager customers can rest easy knowing that their assets are safe under our custody. As we integrate Ethos into our ecosystem, specifically the Universal Wallet and Bedrock, we will more closely unify trading and self-custody. Voyager traders will have the option to keep their assets safely hosted in Voyager’s custody, powered by Ledger Vault, in addition to shifting their crypto assets into self-custody faster and easier.
Commissions Can Kill
In my observation and experience, the average trade size for the typical crypto trader is smaller than a stock trade. Paying $1 on a $50 trade is a 2% loss right out of the gate. Though I believe that commissions or order fees can have a place in trading, we’ve seen a decline in this pricing model. Most large stock brokerages have reduced their order fees significantly over the past decade, bringing them to half or less of what they once were. Crypto is supposed to reinvent the rules of money and I think that the pricing model for trades should not be ignored in this revolution.
Most crypto exchanges charge fees as a percentage-basis of your order (punishing the more dedicated crypto investor). Voyager approaches customer pricing a bit differently. We try to align our pricing model with our customer offering. Voyager only takes a fee (what we call a spread) when we execute an order at a better price than a customer submitted. We can confidently say that we only make money when our customers save money.
Time is Money
In a market where a 5% shift happens hourly and multiple times per day, on any given coin, time is money. The more time a trader has to spend moving coins around and waiting for block confirmations, the less time they have to effectively capitalize on market opportunity. “I convert my fiat to bits here, trade my alts there, and get my news and information over here” is a narrative that many active crypto traders share.
Our mission at Voyager is simple — “to increase crypto adoption.” We think that one of the greatest ways to increase adoption is by offering greater access to the market in one convenient place. We do this by offering a greater spectrum of coins (about to hit 20), all available via USD trading, and accompanied with trending news and advanced charting. With wallet transfers being integrated in the near future (thanks to the great tech and team from Ethos), we are rapidly becoming the place to manage and trade crypto. We hope to reduce the time spent managing crypto and evolve our platform to include the varying tools and features needed to make our customers more powerful traders. We will do this all while honoring the open ecosystem that crypto stands for.
Still think you’re not paying too much for your crypto? If so, start paying closer attention to your crypto trading practices and the cost that comes with it. Are you tracking fees paid as part of your profit or loss? Are you spending a lot of time moving your crypto around (I know it’s fun for us crypto nerds but so is making more money in less time!). As a trader, your ultimate responsibility is to maximize profits and it is up to you to ensure you are doing everything to make this happen.
Tired of paying too much for your crypto? Voyager is probably for you. Download our iOS trading app today and start trading commission-free instantly.
Originally published by Steve Capone at https://www.investvoyager.com on June 14, 2019.