Exchange accounts and most beginner apps are custodial. You hold a database entry, not coins. The operator can freeze withdrawals, be hacked, be ordered by a court, or fail outright, and your balance is then an unsecured claim in an insolvency.
The benefits are genuine: password resets, no seed-phrase to lose, instant internal transfers and access to margin products. For active traders, some custodial exposure is unavoidable.
The discipline is sizing. Keep on an exchange only what your trading actually requires, and move the rest to self-custody. Several large venues have failed while showing healthy balances right up to the freeze.
Related: non-custodial-wallet, self-custody