Risks tied to using a single exchange

[Webetcoins]

The possibility of that exchange exit scamming is the only reason why people suggest using more than one. If you have been in the crypto long enough, you have seen plenty of exchanges exit scam and take all your money with them too. Most recent huge one was FTX I believe, and they took out billions from people and then they used that some bad way, and sad thing is, even they do not have it, they lost others money on their own investments.

In other words, if you use just one exchange, you are letting that exchange decide your moneys future. I do use a single exchange most of the time, just Binance, because I trust them. But, I do keep most of my money in noncustodial wallets, so that if anything happens, I am fine. I just send whatever I want to trade with there.

[shinratensei_]

The possibility of that exchange exit scamming is the only reason why people suggest using more than one. If you have been in the crypto long enough, you have seen plenty of exchanges exit scam and take all your money with them too. Most recent huge one was FTX I believe, and they took out billions from people and then they used that some bad way, and sad thing is, even they do not have it, they lost others money on their own investments.

In other words, if you use just one exchange, you are letting that exchange decide your moneys future. I do use a single exchange most of the time, just Binance, because I trust them. But, I do keep most of my money in noncustodial wallets, so that if anything happens, I am fine. I just send whatever I want to trade with there.

Don't even need the exchange to do exit scam.
There are tons of cex locking people's account which got funding in it. It's good to always have a backup while our accounts are on process of review so that we can resume our trading.

There are many reason why using multiple exchange is better besides this one security concern as well such as events.

[SuperBitMan]

As a trader is advisable to spread and trade in order exchange and not focusing in only one exchange however the reason why some people focus only on one exchange is because they usually forget things easily so they prefer only focusing on one exchange so they can remember their password and not forget if they had an outstanding deal in that exchange, but with what the op has just stated out shows that it is very important to trade with different exchange and not relying on just one especially when you are a trader that focus mainly on trading I uses it as a source of income because if such a thing happen in binance it means you can't trade for some time and it will affect you financially but if you have other places you trade and one is undergoing some kind of reconstruction you can still use the other one and make your money for the day or for the week as usual, but I still don't advice using trading as only your source of income.

[DanWalker]

However, I use a few popular exchanges, the top exchanges are very unlikely to be hacked, and their security is very strong. However, one place to collect and keep your funds safe is a wallet, the chances of hacking are much less here, wallets are safer than exchanges.

Of course, we should use popular and top exchanges to avoid unnecessary problems. But it should be noted that while top exchanges are more secure, that doesn't mean they can't be hacked and if I'm not mistaken, Binance has been hacked in the past. Therefore, do not be too subjective just because we are using reputable exchanges.

To be fair, personal wallets and exchanges both have their own risks and if we are not careful, our wallets can be hacked at any time. Personal wallets are safer because they are more private, if we don't make it public or show it off, no one will know about it. Meanwhile, exchanges are at higher risk, simply because they are public organizations and are always targets for hackers.

[taufik123]

Yeah, of course, some exchanges are used for trading, but I never put a lot of money in exchanges because it's too risky... so even if I trade, it's with a small capital of less than $500, but even that is rare.

I have a friend who always uses one exchange for futures trading, and he refuses to switch to another exchange he keeps tens of thousands of dollars in it, even though I've told him not to keep money in the exchange but he says it's just to maintain the margin so he doesn't get liquidated if the open position reverses direction.

It is really not recommended to only use Exchange as storage, especially with tens of thousands of dollars.
Type the Exchange is hacked there are some big problems such as FTX it will be very troublesome and it could be that the balance is lost or frozen and I don't know when it will be replaced.

I myself even have accounts on all the Exchanges so it's not just one exchange, there are several other exchanges that I try
and see which ones are better about the service and how secure and how secure is it for the users when there are issues like hacks and such.

I often use a local exchange like Indodax even though there are some taxes that need to be paid for each transaction,
but it is quite safe and the local exchange has appropriate regulations so that we as users do not make illegal transactions.

However, the best for fixed storage is a personal wallet or Hardware wallet with double security that is able to store assets quite easily and avoid hacking and the like.

[M47AK16]

I still stand on ‘no exchange is perfect’ but having a backup to spread your activities on would definitely save some stress when the unexpected happens which is why OKX is my third one. Just like having a diversified portfolio and having multiple investments basket, having different exchanges is a good decision in my opinion. Do you also use multiple exchanges or you stick to one ?

Having a backup exchange will also mean that you'll have to divide your funds in both the exchanges which will force you to decrease the sizes of trade. This does not mean we have to put all our eggs in a single basket but we have to select the basket wisely. A good exchange can be reliable but nothing in this world is perfect so be ready to face some downtime. Talking about binance, it has never let me down. Even for some kind of maintenance, they do notify users in advance so we can plan the trades accordingly.

Choosing multiple exchanges will also make us pay double fees which for small traders can not be a good option. I'll say thoroughly do your research before choosing the exchange and stay up to date with their socials & alerts. Exchanges like binance can be trusted because they are backed by some or the other financial tool.

[irhact]

In other words, if you use just one exchange, you are letting that exchange decide your moneys future. I do use a single exchange most of the time, just Binance, because I trust them. But, I do keep most of my money in noncustodial wallets, so that if anything happens, I am fine. I just send whatever I want to trade with there.

Doing this is fine and you don't have any risk because if the exchange was to seize your money, they're only seizing the ones that you sent to them and you still have other coins in your non custodial wallet. This is what I do too and that's what I don't have any fear with exchange crashing and are getting hacked. Exchange aren't designed with good prevention measures to stop hacking from happening and that's why they shouldn't be trusted to help keep our coins safe. It's our personal wallets that should be used for keeping our cryptocurrency safe.

[SOKO-DEKE]

I still stand on ‘no exchange is perfect’ but having a backup to spread your activities on would definitely save some stress when the unexpected happens which is why OKX is my third one. Just like having a diversified portfolio and having multiple investments basket, having different exchanges is a good decision in my opinion. Do you also use multiple exchanges or you stick to one ?

It is a very nice idea not to put all your eggs in the same basket due to the high risk of relying on a single basket. When we lose that basket, we shouldn’t lose everything.So, as a trader, I also don't abide by using only one exchange to trade, no matter how reputable the exchange may be because anything can still happen.

But the point is,what about those who are small traders, meaning those trading with a little amount of money? For this kind of trader, using multiple exchanges may not be beneficial. It could even be stressful for them.So, for small traders, I think using a single, reputable exchange is the best option. But as they grow, they can start trading on multiple exchanges.

[Josefjix]

But the point is,what about those who are small traders, meaning those trading with a little amount of money? For this kind of trader, using multiple exchanges may not be beneficial. It could even be stressful for them.So, for small traders, I think using a single, reputable exchange is the best option. But as they grow, they can start trading on multiple exchanges.

Small trader can still use multiple exchange for trading coins they find to be promising that's not on the initial exchange, for example, $20 trader can actually move this amount of money from one exchange to another looking for the best coin that actually do 10X based on the research done so far.

[salad daging]

But the point is,what about those who are small traders, meaning those trading with a little amount of money? For this kind of trader, using multiple exchanges may not be beneficial. It could even be stressful for them.So, for small traders, I think using a single, reputable exchange is the best option. But as they grow, they can start trading on multiple exchanges.

Small trader can still use multiple exchange for trading coins they find to be promising that's not on the initial exchange, for example, $20 trader can actually move this amount of money from one exchange to another looking for the best coin that actually do 10X based on the research done so far.

For example, if you're trading a coin on exchange A but it's not available on exchange B, there's no problem using multiple exchanges.
I sometimes do the same thing, where if the coin I'm looking for isn't available on Binance, I'll move some funds to another exchange to trade it.
Traders have their own ways of evaluating coins and exchanges, as long as they have a good reputation.

[_act_]

I have a friend who always uses one exchange for futures trading, and he refuses to switch to another exchange he keeps tens of thousands of dollars in it, even though I've told him not to keep money in the exchange but he says it's just to maintain the margin so he doesn't get liquidated if the open position reverses direction.

You are a spot trader is the reason you are able not to have any money on an exchange. All you will need to do is to send coin to the exchange, convert the coin to another coin and withdrawal the coin that you converted to. But if you are a margin or a future trader, you will need to have money left on your trading account because that is what makes leverage trading works. Your friend is very correct but I will prefer not to use only one exchange for it.

[YOSHIE]

When Binance futures went down earlier today, it reminded the risk of relying solely on a single exchange.

So, how do you trade in the crypto market in many exchanges, although the price in each volume exchange can change and also the price is also not the same, but it should not be done in many exchanges, it is more risky than using just one exchange.

For this reason, if you can overcome the risk of trading on well -known exchanges and see trading activities, for that binance I think is not a problem in the trading method.

[crwth]

The main risk is that you can lose your funds if the exchange decides to run and steal all its customers' money, or it gets hacked and has no fund protection or security to ensure that the funds are not stolen.

Perhaps it's best to go to a decentralized exchange to ensure you somehow hold your funds; it feels safer.

[batang_bitcoin]

I second that thought about no exchange is perfect and that's why we need to have some accounts in other exchanges for us to have choices. This also gives us a way to determine the flaws and advantages of each of them. While there are some that we will definitely like on how smooth transactions going there. Don't stick to it and have some trades as well in the other ones. Aside from the opportunities, maybe some airdrops or earn features, the entire exchange itself we'll be liked on how they take care of their customers.

[tvplus006]

...If you take a look on X or Google people that have lost their assets just because they are keeping their funds on exchanges without the knowledge of using non custodian wallet that is absolutely safe.

You may be surprised by this fact, but those who lost their money using a non-custodial wallet will be no less than those who lost them due to hacking the exchange. And in some cases, if you use a trusted exchange, for example, as a Binance, the money was returned to the victims from a special SAFU insurance fund.

[Coyster]

Perhaps it's best to go to a decentralized exchange to ensure you somehow hold your funds; it feels safer.

Decentralized exchanges are not suitable for traders. Centralized exchanges are more user friendly and they offer better liquidity and more trading options, etc. Decentralized exchanges are good for privacy, but as for hodling your funds and the feeling of safety while doing that, the only option is a non-custodial wallet, anything else doesn't count. Exchanges are for trading and not for hodling coins.

[Pandu Geddon]

I second that thought about no exchange is perfect and that's why we need to have some accounts in other exchanges for us to have choices. This also gives us a way to determine the flaws and advantages of each of them. While there are some that we will definitely like on how smooth transactions going there. Don't stick to it and have some trades as well in the other ones. Aside from the opportunities, maybe some airdrops or earn features, the entire exchange itself we'll be liked on how they take care of their customers.

I am sure that traders have more than one exchange account, but I am not sure if most traders use multiple exchanges for their daily trading. As you said, most traders have exchanges that they already prefer. For whatever reason, it is highly likely that traders will more often use those exchanges for their daily trading activities, perhaps using other exchanges a few times.

[Merit.s]

The main risk is that you can lose your funds if the exchange decides to run and steal all its customers' money, or it gets hacked and has no fund protection or security to ensure that the funds are not stolen.

Perhaps it's best to go to a decentralized exchange to ensure you somehow hold your funds; it feels safer.

It's not all the coins that is in CEX is in DEX which is the reason why traders prefer using CEx because you can get a newly listed coin in centralized exchange. Apart from the no KYC stuff with decentralized exchange, I don't see how it makes keeping your coins in them safer than a centralized exchange. The only safe place to keep your coins is a self custody wallet where only you have the private keys.

[PX-Z]

...This just shows why you should have options open as a form of risk management because this can happen to any exchange at any time.  

That's true, having at least two exchanges is a good practice. But most importantly, always stick to exchanges that are truly trusted. A short downtime of a few minutes or even an hour is still acceptable, though rare. But when an exchange goes down for several hours, that's a serious concern. Fortunately, most of the big exchanges carry insurance to protect their users’ funds but the time you will wait for refund after a hack or something similar, that's probably bad experience to go through

[Issa56]

As a trader is advisable to spread and trade in order exchange and not focusing in only one exchange however the reason why some people focus only on one exchange is because they usually forget things easily so they prefer only focusing on one exchange so they can remember their password and not forget if they had an outstanding deal in that exchange

Do you mean people to open trade in multiple exchanges at once? If that’s what you talking about, then why do you really think it’s necessary? If you enter all your trades in a exchange, then you going to get the same result with someone that opens the same trades on multiple exchanges, and if you decide to enter trades on different exchanges, you might end up being confuse at the end which loss might end up happening.

If you think people will forget there password and that’s why they only focus on one exchange, I don’t really agree with that. After creating a account on exchange, you can just decide to write down the password, and whenever you forget it, you can just check where its written, and you can easily click on forget password when you forget your exchange password.

Seriously I don’t really think it’s necessary to enter trades on different exchanges, you will end up being confused. You might be having account on different exchanges, but when you want to trade, just pick one and make use of it, I just feel that’s better.