Crypto trading involves buying and selling cryptocurrencies to profit from price changes. You can trade cryptocurrencies directly, such as bitcoin (BTC) or ether (ETH), or use financial products based on their prices, such as futures and options.
Trading is generally more active and shorter-term than investing. Investing typically means buying an asset with the expectation that its value will increase over years or decades. Trading focuses more on shorter-term price movements and can involve frequent buying and selling.
Disclaimer: This page is not financial advice or an endorsement of digital assets, providers or services. Digital assets are volatile and risky, and past performance is no guarantee of future results. Potential regulations or policies can affect their availability and services provided. Talk with a financial professional before making a decision. Finder or the author may own cryptocurrency discussed on this page.
Trading crypto follows a fairly simple process: choose a platform, fund your account, select what you want to trade, decide how much to risk and place an order.
Start by comparing crypto exchanges and trading platforms. The right choice depends on what you want to trade and which features matter to you.
Look at:
Create an account with your chosen crypto trading platform and complete any required identity verification. You’ll typically need to provide personal information and a government-issued ID.
Once your account is approved, add funds using a supported payment method, such as a bank transfer or debit card. You can then use your cash balance to buy cryptocurrency.
Choose the cryptocurrency you want to trade and a trading pair. A trading pair tells you what you’re buying or selling and what you’re using to pay for it.
For example:
In BTC/USD, BTC is the base currency and USD is the quote currency. If BTC/USD is trading at $100,000, one bitcoin costs $100,000.
Highly traded pairs tend to have more liquidity and tighter spreads, which can make it easier to buy or sell without significantly affecting the price.
Consider how much money you’re willing to risk, then choose a position size that fits within that limit.
Position sizing means determining how much cryptocurrency to buy or sell based on your available funds and risk tolerance. For example, you might decide that you don’t want a single trade to expose more than a small percentage of your trading account to potential losses.
Consider the asset’s volatility and where you would exit the trade if the price moves against you. Setting these limits before placing an order can help prevent one trade from creating a disproportionately large loss.
Your order type determines how and when a trade executes.
| Order | What it does | Best for |
|---|---|---|
| Market | Executes immediately at the best available price | Simple trades |
| Limit | Executes only at your specified price or better | Controlling your entry price |
| Stop-loss | Triggers an order when the price reaches a specified level | Managing potential losses |
| Take-profit | Triggers an order when the price reaches a specified target | Automatically exiting at a target |
For your first trades, market or limit orders will usually be enough to gain experience and understand how trading works. Stop-loss and take-profit orders become more useful when you have a specific exit plan.
Before submitting an order, review the trading pair, amount, order type, estimated execution price and fees.
For example, suppose bitcoin is trading at $100,000 and you want to buy $500 worth of BTC. A market order would attempt to purchase $500 of bitcoin at the best available prices. That would be about 0.005 BTC before fees, although your actual execution price and amount may vary slightly.
You could instead place a limit order to buy bitcoin at $98,000. The order would only execute if BTC reaches that price or a better one, so there’s no guarantee the trade will fill.
Decide how you’ll manage the position before you place it. Depending on your strategy, you might set a stop-loss to help limit potential losses or a take-profit order to automatically close the position at a target price.
Continue to monitor your position and be aware that crypto prices can move quickly. Don’t assume a trade will follow your original plan simply because the market initially moves in your favor.
After closing the trade, record what happened in a trading journal. Include details such as your entry and exit prices, position size, fees, the strategy you used and why you made the trade.
The type of crypto trading you choose determines whether you’re buying the cryptocurrency itself or using a financial product based on its price.
Spot trading means buying or selling cryptocurrency directly at the current market price. When you buy bitcoin through a spot market, you receive BTC in your exchange account or crypto wallet.
Spot trading doesn’t require borrowing money or using leverage, making it the simplest option for beginners. You can buy an asset and hold it, or sell it later to exit the position.
The main risk is that the cryptocurrency’s value can fall after you buy it. You can lose money even without using leverage.
Margin trading lets you borrow funds from a trading platform to open a larger position than you could with your own money.
For example, using $1,000 of your own money with 2x leverage could give you exposure to a $2,000 position. A relatively small move in the cryptocurrency’s price can therefore have a much larger effect on your account.
Margin trading can also result in liquidation if the market moves far enough against your position. Because of these risks, margin trading is generally better suited to experienced traders.
Crypto derivatives are financial contracts whose value is based on the price of a cryptocurrency or other underlying asset. You can use derivatives to speculate on price movements or, in some cases, hedge another position without buying the underlying cryptocurrency directly.
Common types include:
Derivatives can offer more ways to trade, including strategies for profiting from falling prices, but they can also introduce leverage, liquidation risk and greater complexity.
Your trading style is largely determined by how long you hold a position. Shorter-term approaches generally require more active monitoring, while longer-term approaches involve fewer trades but more exposure to broader market movements.
| Trading style | Typical holding period | How it works |
|---|---|---|
| Day trading | Minutes to hours | Open and close positions within the same day to try to profit from short-term price movements. |
| Swing trading | Days to weeks | Hold positions long enough to try to capture a larger price movement without making multiple trades throughout the day. |
| Position trading | Weeks to months or longer | Hold through short-term price fluctuations while focusing on broader market trends and longer-term price movements. |
There’s no universally best trading style. Consider how much time you can devote to the market, how frequently you want to trade and how comfortable you are with short-term price fluctuations.
The cost of trading crypto varies by platform, asset and transaction. Common costs include:
Check the total cost of a transaction rather than looking only at the advertised trading fee.
Crypto trading can result in significant losses. A few basic risk-management practices can help limit how much you’re exposed to on any one trade.
You don’t necessarily have to risk real money while learning how crypto trading works.
Some platforms, like eToro, offer paper trading and demo accounts that let you practice placing trades using simulated funds. Availability varies by platform.
Practice can help you become familiar with order types, charts and the mechanics of opening and closing a position before you commit real money.
When you’re ready to trade with real funds, starting with a small position can limit the financial consequences of mistakes while you learn.
Crypto trading can be profitable, but there’s no reliable strategy that guarantees profits. Cryptocurrency prices can rise or fall rapidly, and trading costs can reduce your returns.
Short-term trading can be particularly difficult because you’re competing against other market participants while trying to predict price movements. Frequent trading also means paying fees and spreads more often.
Treat any claims of guaranteed crypto profits, easy money or risk-free trading with skepticism.
Crypto trading is relatively easy to start, but consistently making money is much harder. Before placing a trade, evaluate crypto exchanges based on fees, available assets, security, order types and features, then choose a platform that fits how you plan to trade.
From there, decide what you want to trade, how much you’re willing to risk and how you’ll enter and exit the position. Start with a strategy and risk limits you can stick to, and remember that crypto’s volatility can lead to significant losses.
Learn what crypto futures contracts on Binance are and how to trade them.
Learn how to trade crypto futures contracts on Binance.
Learn how to calculate fees for trading Binance futures contracts.
Day trading crypto involves making short-term trades to take advantage of small price fluctuations.
Betting against bitcoin? Know your options before the market decides to humble you.
If you’re looking for ways to gain exposure to bitcoin and other digital currencies, cryptocurrency ETFs could be worth exploring. Find out what crypto ETFs are and how they work in this introductory guide.
Your detailed guide to cryptocurrency trading bots, how they work and the benefits and risks you need to consider when choosing a crypto trading bot.
Your guide to cryptocurrency funds, how they work and the potential benefits and risks they offer.
There’s much to gain and lose in the volatile cryptocurrency market. We’ll show you how to do an in-depth technical analysis to make the right decisions.
Find out what exactly bitcoin futures trading is, where to get started and how to pick the right trading site.
Can you recommend a cryptotrading guide for me? Thank you
Hi Joktan,
Thank you for your inquiry.
If you are new to cryptocurrency, you can use the information on this page as your guide on how you can buy and sell cryptocurrencies like Bitcoin, Ethereum, to name a few. You can also check out our latest cryptocurrency guides and news to keep yourself in the loop.
There are also various beginners and advanced guides online that you can check. Additionally, exchanges and wallets’ official websites have training materials and video guides that can be helpful for you.
I hope this information has helped.
Cheers,
Harold
Good day…
How do I know if I have lost a trade?
Hi Tj,
Thanks for your inquiry.
We cannot say when you have lost a trade in cryptocurrency trading. If you’re not careful when it comes to cryptocurrency trading, you could find yourself gambling more than you’re trading, and eventually you might lose everything you’ve invested. Never invest more money than you are willing to lose. You should consider any money you put into a trade as lost.
Best regards,
Rench
what is the best platform to use to buy and sell smaller coins/tokens,
in the US ?
for example- Stratis (STRAT)
Thank you
Hi Frank,
Thanks for reaching out to us. I hope all is good on your end.
I am sorry because I am unable to give you a personal recommendation as we are a comparison website and general information service. Your decision would entirely depend on your needs. You will also need to put in the time to learn how each platform works, where each feature is, and how to utilize it. Kindly spend some time with it and continue doing your research. You may find a list of trading platforms on the page you’re viewing. You may click the green “Go to site” button and/or the links for you to read more pertinent information about each option.
Alternatively, you may view a list of cryptocurrency exchanges. You may check for the payment methods from the list for possible information on available cryptocurrencies. You may click the green “Go to site” button too.
Please note that is always advisable to conduct thorough research on any cryptocurrency before buying or investing because there are significant risks involved.
I hope this helps.
Best regards,
Judith