Understanding The Risks Of Trading On CEX And DEX

Understanding the Risk of trade with CEX and Dex: Kryptovaluta Investing Guide

The world of cryptocurrencies has exploded in recent years and many new investors are entering the market every day. As exciting as it may be, investing in a cryptic currency requires a solid understanding of related risks. In this article, we will examine the risks dealing with the exchanges of cryptocurrencies (CEX) and decentralized stock exchanges (DEX), also known as DexS, related to trade trade (DexS).

What are CEXS?

Cryptative exchange are platforms with which users can buy, sell and act with a crypto currency. They offer sellers a convenient way to exchange cryptocurrencies for another, often with an additional advantage of lever and margin trade. CEXS can be categorized in two main types: Central Exchange (CEX) and decentralized exchange (Dex).

CEXSA types

* Central Stock Exchange (CEX):

These are the traditional stock exchanges under the central authorities. As a rule, users have to register the account, check their identity and follow strict rules before they are allowed to act.

* Decentralized exchange (Dex): Dexs, on the other hand, are decentralized platforms operating without central government. Use blockchain technology to make it easier and allow users to guard and manage several cryptocurrencies.

Risks connected to CEX trade

Although CEX trading can be comfortable, there are several risks:

• High fees: centralized stock exchanges charge a high trade fee, often between 0.5% and 2.5% per transaction.

• Liquidity risks: If the exchange has a crisis of liquidity or has a low trading volume, users may not sell their crypto currency at affordable prices.

• Safety risks: Exchange is sensitive to hacking and cyber attacks, which can lead to significant financial losses for dealers.

• Regulatory risks: changes in regulatory environments can affect CEX sustainability and force them to fully adjust or risk.

What are Dexs?

Dexs are decentralized platforms that use blockchain technology to facilitate retail without central government. Offer several advantages over traditional CEXS:

• Lower fees: DexS usually charge lower shop fees compared to CEXS.

• Increased safety: decentralized exchange is safer because no third parties are required to do jobs.

• Higher liquidity: DexS often have a higher amount of trading and a more active user community.

Risks associated with dex trading

While DexS offers several advantages, some risks related to trading on these platforms are also linked:

• Liquidity risks: As mentioned above, Dexs may have a problem with liquidity if the dealer number is too small.

• Intelligent Contracting Risks: Smart Contracts are systems based on a code that automates many aspects of dex work. However, you can be sensitive to errors and features, which can lead to great losses for dilemmas.

• Regulatory risks: As mentioned above, regulatory changes can affect DexS sustainability.

Diploma

Trading with CEXS or DexS requires a solid understanding of related risks. Although CEXS offer comfort and lower fees, they also have a high fee and risk of liquidity. Dexs, on the other hand, are decentralized platforms with lower fees and greater security, but may be a risk of liquidity if the distributor number is too small.

How to minimize risks when trading CEX or Dexs:

* Spend a thorough research

before joining the exchange.

* Realize the fees and fees awarded to each platform.

* Choose a serious exchange that has good results for safety and user support.

* Keep your software during to ensure you have the latest security patches.

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