An exchange for cryptocurrencies, binary options of fiat currencies, stocks, equities or etc. is exactly what it sounds, a platform where users can exchange a unit for another. Basically, it is a trading spot – you buy something and then sell it. So far, so good. But after the initial idea came up, exchanges have been upgraded to a complex system for operating financial instruments. After you open an account there, you bid on the prices (simply put, to predict their prices), to short a certain market (to sell a borrowed entity), to exchange currencies one into another and to make a profit out of the difference in price. That comes from the money’s volatility – its price fluctuates due to changes in the peg (could be the price of a barrel of oil, for instance) and respectively, when you buy a coin at a certain price and that price goes up, you win. If it goes too low, you lose.
It sounds like a risky business, but it is a huge industry, which, if played well, might bring a profit of 10% or even more. That is how all those people got rich with Bitcoin.
Some exchanges work with fiat/ crypto couples, whereas others aim to keep it crypto clean with only crypto pairs. Prices of a coin also vary: marketplaces are not connected to each other and decide by their own how to rate a token. Usually, there is also a trading fee, which is a sum you pay to the platform for using their services.
One thing is for sure: you need to learn how exchanges work, in order to start trading.
A good source for a trading education is this one, which totally gives you the basic knowledge you need.
This lady over here explains carefully, step by step, how to proceed on an exchange platform.
*Video content posted on CryptoFrog is under the Creative Commons License. Credit goes to The Daily Decrypt.