Poloniex Review – Is it scam or safe?

Poloniex Review – Is it scam or safe? explained by professional Forex trading experts the “ForexSQ” FX trading team.

Poloniex Review – Is it scam or safe?

Poloniex is a crypto currency exchange, which provides a lot of alternative coins for trading. At the time of writing of this review, it is the second most popular Bitcoin exchange, as measured by the daily volume.

The company, security of funds

Company Country Regulation
Poloniex Inc. USA N/A

Poloniex was founded in 2014 by Tristan D’Agosta. The company is based in the United States, but is not overseen by the local financial watchdogs. This is not that unusual, when we are talking about crypto currency exchanges. If you plan on dealing with companies in this relatively new asset class, you are bound to have counterparty risk i.e. risk of the other side simply not paying you.

Poloniex has experienced a severe hack in the past. Approximately 12% of the Bitcoin, which was present at the exchange was stolen in March 2014. The company subsequently raised the commissions on all transactions, in order to raise money for the affected clients. They were partially compensated eventually. This approach was partially effective and partially fair. Bitfinex, for instance, reacted much better (in our opinion), when the company was hacked in 2016.

At the time of writing of this review (July 2017), there are multiple user complaints against Poloniex. The company’s support appears to be functioning very slowly. More importantly the same goes for the withdrawal procedures, which are allegedly very delayed. These issues may be temporary or a sign of even greater trouble to come. It is impossible to tell at this point, but we will update this review in the future.

Trading conditions

Trading instruments (cryptocurrencies)

Poloniex was always known for the vast variety of altcoins, which it provides. Frankly they are too many to list, but here are some of the most popular: Bitcoin, Ethereum, Litecoin, Ripple, Monero, Dash, Zcash.

Minimum initial deposit

No clear minimum deposit level is announced by Poloniex. This is not that unusual in the cryptoverse, unlike the forex industry, where most brokers announce this information. For instance, the FCA-regulated industry pioneers at IG (who by the way also provide bitcoin trading) do not have a minimum deposit requirement. Essentially, you can start treading with as little as you want.

Leverage

The maximum leverage ratio at Poloniex is 1 to 2.5. Keep in mind crypto currencies tend to be much more volatile than the established traditional ones. If EUR/USD rarely moves more tha 100-200 pips per day, the price of Bitcoin often moves 5-10%, even in days where there are no major news regarding it. This is the reason, why crypto-exchanges provide much lower leverage than forex brokers.

Fees

Poloniex currently charges a 0.15% maker fee and a 0.25% taker fee, which are in line with the current offers by other exchanges. To give forex traders an idea what those fees mean, we must explain on what bases they are calculated.

When trading on an exchange one can either buy an asset at lowest offer provided by other participants, or place his own bid at any lower price he chooses. If you decide to immediately execute your trade, you would effectively be taking away liquidity from the market. This makes you a “taker”, who has to pay the slightly higher fee. Alternatively if you place your own bid and another trader decides to execute one it, you are providing liquidity to the exchange. This makes you a “maker” (not the same as a forex market maker), who pays lower fees.

These percentages are calculated on the total nominal value of your position. For other comparisons between forex brokers and crypto currency exchanges, read this article.

Trading platform

Poloniex offers trading through a web-based platform. Although it does its job, we are not that impressed by it. The platform’s charting functionality feels very clunky. The chart can not be moved, resized or set to full-screen. Zooming and scrolling your chart, the way you want to can be a nightmare. The trading volumes often take a huge portion of the char and interact with the candlesticks (especially if zoomed-in). Moving Averages, Bollinger Bands and MACD are literally all of the available technical indicators. From a trader’s point of view this platform is nowhere near MetaTrader4 (MT4), the most popular fiat currency trading solution. Here is a preview of what Poloniex offers:

Although everything you need to know is presented, this does take some time to get used to. The most left columns are the actual trading price and the second one is the amount available at this particular price. While the other two ones may seem obsolete, this is definitely not the case when looking at other pairs, in which you trade one crypto currency against another.

Methods of payment

Payments to and from Poloniex are only done in crypto currencies. While this limits the potential for attracting less experienced enthusiasts, it is not an uncommon practice. Adding options such as a Bank Transfer, Credit Card, Neteller and so on will increase the trader base.