What is a decentralised exchange, and how do I trade on one?


A decentralised exchange (DEX) is a cryptocurrency marketplace that enables users to trade without needing a centralised intermediary. It operates on a peer-to-peer network, allowing users to buy and sell digital assets directly from each other. DEXs are popular among traders due to their security, privacy, and low fees. This article will discuss how traders can trade on a decentralised exchange.

Get familiar with decentralised exchanges

Before beginning your trading journey, it’s essential to understand the basics of decentralised exchanges. They operate differently than traditional exchanges because they don’t use an order book; trades are conducted through intelligent contracts with predetermined prices. Additionally, DEXs require an external wallet to store and withdraw coins.

Select and register on a DEX

There are several decentralised exchanges available, each with its specific features. It’s essential to research the various platforms and select one that best suits your trading needs. Once you have chosen a platform, registering is generally straightforward; most DEXs use email or social media accounts for authentication.

Fund your wallet

Before you can begin trading, you’ll need to deposit funds into your wallet. The process varies depending on the type of coin you intend to trade. Still, it typically requires sending funds from another wallet, such as MetaMask or MyEtherWallet, to the address provided by the DEX.

Place an order

Once your wallet is funded, you can then place an order. Most DEXs are relatively easy to use and provide helpful resources to help understand the platform. Depending on the trade type (limit or market), you’ll need to enter different information into the order form when placing it.

Monitor your trades

It’s essential to monitor your trades closely, as price fluctuations could affect your profits. Some platforms offer advanced features such as charting tools, technical indicators, and trading signals to help traders stay on top of their positions.

Withdraw funds from DEX

When you’re ready to withdraw funds from your DEX, you’ll need to transfer them back to your original wallet. Review the withdrawal fees before making a transaction, as these can vary significantly from one platform to the next.

Take advantage of DEX features

Decentralised exchanges offer unique features that you won’t find on traditional platforms. For example, some allow users to stake coins or participate in liquidity mining and yield farming activities. These opportunities can be great ways for traders to diversify their portfolios and gain exposure to new markets.

Exercise caution

Trading is always risky, so you must exercise caution when trading on decentralised exchanges. Always research projects before investing; pay close attention to the team, roadmap, and liquidity of the coins that interest you. Additionally, it’s crucial to double-check that you’re using the correct address when sending funds or performing other transactions.

Risks of trading on a decentralised exchange

Smart contract vulnerabilities

As decentralised exchanges are built on blockchain technology, they can be exposed to intelligent contract vulnerabilities. Using reliable and trusted platforms that have undergone rigorous security auditing is essential.

Counterparty risk

Since you’re trading directly with other users, there is a chance that they may not follow through with their end of the trade. To mitigate this risk, always make sure you’re trading with someone with a good track record.

Poor liquidity

Poor liquidity can lead to slippage and higher fees, so it’s essential to research the DEX before depositing funds. Additionally, only trade large amounts once you understand the platform better.

Benefits of decentralised exchanges


One of the main advantages of using a DEX is that it doesn’t require you to provide personal information, such as your name or email address. It makes it much easier to keep your trading activity private.


With a decentralised exchange, you have complete control over your funds. You don’t need to trust a third party with access to your money, as you are solely responsible for keeping it safe and secure.

Cost efficiency

Traditional exchanges often charge high fees for deposits and withdrawals, but DEXs typically offer lower costs. Additionally, they may not require traders to pay additional fees when placing orders.


DEXs are typically accessible from anywhere worldwide, allowing traders to access new markets and diversify their portfolios. Additionally, some exchanges offer advanced features such as margin trading and futures contracts for more experienced users.

To get started trading crypto, intermediate traders can look at Saxo Dubai. With an array of advanced and professional tools to help you make the most of your trades, Saxo traders can also join a community of likeminded traders and build a community.