There are many ways to profit (or lose money) by learning how to trade crypto. We break down how to buy crypto in Canada, including trading methods to consider and platforms where you can trade crypto.
How to buy crypto in Canada: 5 easy steps
1. Decide if crypto investing is right for you
Before learning how to trade crypto in Canada, assess your risk tolerance and financial goals. Crypto trading is notoriously volatile, and you could lose substantially. Read guides and observe moves made by experienced traders to see if crypto trading suits your investment objectives. Never trade more than you can afford to lose. Speak with a professional financial adviser before getting started.
2. Choose a long-term or short-term trading strategy
Traders are typically divided up into 2 groups: long- and short-term. Both are very different.
Long-term trading
Long-term traders buy and hold cryptocurrencies for weeks, months or even years, with the intention of selling at a profit or using it later.
Short-term trading is about taking advantage of short-term cryptocurrency price swings by creating and executing a trading strategy.
It’s more active, stressful and risky than long-term trading, but it also offers faster and larger potential returns for those who do it right. It also lets you profit from crypto prices dropping as well as rising.
3. Choose a trading method
There are three main ways to buy crypto, but not all crypto exchanges offer every method. Simple platforms might only let you trade crypto pairs, while advanced platforms designed for active traders might also offer derivatives and CFDs.
A. Trade cryptocurrencies directly against each other
You can trade a pair of cryptos against each other or against fiat currency. The goals is to buy low and sell high. This might mean buying crypto before an important event (for example, Cardano adding smart contracts or Bitcoin halving) and selling it into a stablecoin once the hype begins to wear off.
If you do it right, your funds grow. If you do it wrong, your funds shrink over time as bad trades and changing markets can eat away at your holdings. The value of your crypto will rise and fall, but there’s no risk of immediately losing all your money to a bad trade. Buying crypto with crypto or fiat currency requires timing the market accurately, which requires a lot of research and can be difficult.
Good for: Avoiding excessive risks, keeping things simple.
Not so good for: High-risk/high-reward strategies, profiting from markets dropping.
B. Trade cryptocurrency derivatives
You don’t have to own any cryptocurrency to trade crypto derivatives. Instead, you can “bet” on market movements. However, this is a complex strategy that’s only suitable for experienced traders, as it can be a fast way of losing money.
There are several types of derivatives, such as futures, options and perpetual swaps. These are different but can be used simultaneously.
Crypto derivatives trading often includes using leverage, which can substantially magnify gains and losses. Traders can also open short positions to directly profit from cryptocurrency price drops, mitigate their risks by hedging and make big trades even if the markets are relatively quiet.
Good for: Leverage, large profits (or losses) even in flat markets, fast gains or losses, high-risk/high-reward strategies, flexibility in any market conditions.
Not so good for: First-time cryptocurrency traders.
C. Trade cryptocurrency CFDs
Cryptocurrency CFDs (contracts for difference) are a specific type of derivative that lets you place bets on the price movement of an asset. Like other derivatives, they let traders go long (bet on price rises) and short (bet on price drops), and utilize leverage without owning the underlying asset.
Unlike other derivatives, CFDs don’t involve buying and selling derivatives in an open market. Instead, you’re just buying from and selling to whichever trading platform you’re using. While most cryptocurrency derivatives treat crypto as a commodity of sorts, CFDs typically approach cryptocurrency similar to forex trading.
Good for: Leverage, large profits (or losses) even in flat markets, fast gains or losses, people who are experienced with forex trading and want to try their hand at crypto.
Not so good for: Beginners; due to the elevated risks, the potential for larger losses and all the additional tools and jargon you’ll have to know.
4. Learn how to place trades and read charts
An important part of learning how to trade cryptocurrency is understanding how technical graphs work and the different orders you can place.
Here’s an example from the Binance trading platform, showing the Bitcoin/USDT market with the important parts annotated. (Note that you can’t open a Binance account in Canada, but there are alternative platforms).
The red and green box at the top is the price chart. At the bottom is where you place your buy and sell orders. Sandwiched between them is where you can click through to derivatives if this is offered in your country. It’s a completely separate market, where people trade futures contracts rather than Bitcoin itself.
Let’s zoom in on the bottom section, where you place buy and sell orders. There are 2 things to pay attention to here: your order type and the amount you want to buy or sell.
In this case, there are three basic order types available: market, stop-limit and OCO.
Market. Place a buy or sell order at the current market price and execute your trade immediately.
Stop-limit. Once you select this, you’ll be prompted to choose a stop price and limit price. Once the asset (Bitcoin in this case) reaches the stop price, it’ll sell for at least the limit price if possible.
OCO (one cancels the other). This is two stop-limit orders combined, where one cancels the other if it’s triggered. You will need to set an active duration for both stop-limit and OCO orders.
Market and stop-limit are the basic order types you’ll find on almost all exchanges, while OCO is a bit less common. Different exchanges will sometimes have additional order types or slightly different rules about how orders can be placed.
When choosing a cryptocurrency trading platform, consider factors like the order types, derivatives and leverage is available and how easily it integrates with crypto trading bots. High-volume traders should also consider how fees will impact their overall profit.
Although this isn’t a exhaustive list of exchanges, here’s where to trade crypto in Canada.
The difference between gambling and trading is having a plan. The most important part of creating a plan is ensuring it suits your specific trading goals. In general, a trading plan involves a three-step process:
1. Look for patterns
The basic principle of reading charts and creating trading plans is to look for patterns in previous price movements and then use those to try and predict future movements.
Some patterns emerge frequently enough across multiple markets that they’re given their own names, such as resistance and support. Others can be much more obscure and aren’t given names of their own.
For example, you might recognize a pattern where Bitcoin goes up when Ethereum goes down, or Bitcoin rises when the US dollar falls relative to the Chinese renminbi.
Patterns can be very helpful for traders, but remember that past performance isn’t always a reliable indication of future performance.
Trends in prices can be detected using technical analysis algorithms, which only look at the history of prices, but there's no guarantee that a trend detected that way will continue in the future. To spot a trend that's likely to continue, it's necessary to look at fundamentals, such as whether the user base is growing along with the price. Innovative cryptocurrencies that make it possible to do things that could never be done before are likely to experience short-term and medium-term growth during the period before competition appears.
The following are the two basic components of a trading plan:
A point where you take profits
A point where you cut your losses
For example, someone’s basic plan might be to sell 33% of their Bitcoin for every time the price goes up by US$1,000 (taking profits) or immediately sell all their Bitcoin if prices drop below the current support line (cutting losses). To set up this plan, they could set up a series of stop-limit orders.
This is not necessarily a good plan, but it would ensure that the amount they gain or lose is within sensible boundaries no matter what the market does.
As traders get more experienced, they can create increasingly sophisticated trading plans that tie together more market indicators and allow for much more nuanced trading strategies.
Experienced traders typically use cryptocurrency trading bots to execute their strategies because they tirelessly follow complex trading plans faster and more reliably than a human ever could.
3. Experiment
It’s good to test trading theories before throwing real money at them. Paper trading or backtesting can be useful here. Both features are often found on trading platforms.
Paper trading is a way of using fake money on markets, so you can test a trading strategy in real, current conditions. Backtesting is when you put a trading strategy through historical market movements to see how it would have performed.
If you’re a beginner trying to get your head around the basics of reading charts and spotting patterns, you may want to read the step-by-step guide to cryptocurrency technical analysis for a sense of how to start spotting patterns.
What to watch out for when buying crypto
Cryptocurrency trading incurs many of the risks of trading on any other market as well as some unique challenges.
Volatility. Cryptocurrency is volatile. This is one of the things that makes it attractive to traders, but it also makes it very risky. Double-digit intra-day price swings are common, and drastic shifts can happen in just minutes.
Unregulated, manipulated markets. Compared to traditional markets, crypto is largely unregulated. Crypto is highly volatile, and market manipulation is common. It’s relatively easy for wealthy “whales” to manipulate prices and force liquidations.
Inaccurate patterns. Markets will often follow patterns, but often they won’t. This is a risk when trading anything, but the unique characteristics of the cryptocurrency market mean it’s a particular challenge there.
Being over-exposed. Don’t bet more than you can afford to lose. Limit your exposure and consider setting up “take profit” and “stop loss” orders to limit your exposure in the event of drastic swings.
Using excessive leverage. Many cryptocurrency exchanges will offer up to 100x leverage, dramatically magnifying the potential risks. The volatility of cryptocurrency, combined with high leverage trading, can see positions be liquidated extremely quickly.
Not knowing when to fold. Whether you’re up or down, it’s important to know when to close a position and either take profits or cut your losses.
Crypto trading vs stock trading
Crypto trading involves buying and selling digital assets through a cryptocurrency exchange. Crypto and stock trading both rely on identifying trading opportunities and managing risk, but crypto markets are generally considered riskier and more volatile, and liquidity is comparatively low.
Stock trading involves buying and selling stocks through a stock exchange. Cryptocurrency markets are open 24/7, while stock markets have set opening and closing hours.
Stocks represent fractional ownership of a publicly listed company. Shareholders may be protected by national securities regulators. Some stocks come with company voting rights and dividends. Cryptocurrency ownership doesn’t necessarily entitle you to anything other than the asset itself.
More investors looking for the best crypto exchange in Canada
According to results from the Finder: Consumer Sentiment Survey Q1 (CSTQ1), approximately 1 in 5 Canadians either invest or trade in cryptocurrency.(1)
However, investor confidence seems to ebb and flow. On average, just over 1 in 5 investors (21%) considered the first quarter in 2023 (between January and March) to be a “good time to invest in cryptocurrency,” according to results from CSTQ1. Crypto trader confidence dropped slightly between April and June, with an average of 18% of investors who thought it was a “good time to invest in cryptocurrency,” according to Finder: Consumer Sentiment Survey Q2 (CSTQ2).(2)
In general, younger investors and men were more likely to trade in cryptocurrency. According to CSTQ1 results, 26% of Gen Z investors trade crypto, compared to 21% millennial investors, 19% of Gen X investors and 6% of Baby Boomers. On average, 23% of men hold crypto, compared to 15% of women.
Bottom line
Trading cryptocurrency can be a money maker for some, but it’s also very risky. Learning how to buy crypto in Canada involves carefully researching exchanges and studying different trading styles to find a strategy that matches your investment goals and risk tolerance.
Crypto is volatile. Even advanced traders can lose all their capital through a few bad trades. Don’t begin trading until you understand how the market works and have thoroughly researched different types of cryptocurrency. When in doubt, consult a financial adviser.
There's no single best way to trade cryptocurrency. It depends on your long- or short-term investment goals. Focus on sticking to a trading strategy like following market patterns, setting limits on losses/profits or diversifying your assets.
Start off by setting a goal and developing a strategy. This will help with working out the next steps, like choosing a trading platform that meets your requirements and figuring out which cryptocurrencies to trade.
Yes, many cryptocurrency exchanges have minimum deposit requirements as low as $10. For example, VirgoCX's minimum deposits are $0 for Interac e-Transfer (Send Money), $10 for debit/credit/bill payments or $3,000 for wire transfers. Kraken's minimum deposits are $5 for Interac e-Transfers, $12.50 for debit/credit or $20 if you deposit funds in person at a Canada Post location. With Coinsquare, the minimum deposit is just $20 for Interac e-Transfers.
Crypto trading can be profitable. Some experienced investors make a living just by trading digital currencies. But it's also very risky and not suitable for everyone. Crypto is very volatile. It's easy to lose, especially if you trade with leverage. Never invest more than you can afford to lose.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.
Andrew Munro was the global cryptocurrency editor at Finder, covering all aspects of cryptocurrency and the blockchain. Andrew has a Bachelor of Arts from the University of New South Wales.
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