Cryptocurrency trading

Find out how to get started trading cryptocurrency in this step-by-step guide.

Updated

Fact checked
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 72%-80.5% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

There are lots of different ways of making a profit (or losing money) from cryptocurrency. Trading is one of the most popular.

This guide explains where to begin, including how to choose a trading style, how to devise a trading plan, what to look for in a trading platform and things to consider.

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.

eToro Cryptocurrency Trading & CFDs

Disclaimer: Volatile investment product. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Copy the trades of leading cryptocurrency investors on this unique social investment platform.

  • Buy or trade Bitcoin and 17 other cryptocurrencies on eToro's unique social trading platform.
  • Copy the strategies of leading traders
  • Buy crypto or purchase CFDs
  • Trade 2000+ assets including FX, stocks and ETFs
  • Get a free demo account
Promoted

How to trade cryptocurrency

There are five steps to getting started:

  1. Do your research and work out whether cryptocurrency trading is right for you.
  2. Decide whether you want to do long term or short term trading.
  3. Choose the trading method that’s right for you.
  4. Learn how to place trades and read charts.
  5. Choose an exchange and start trading.

This guide walks you through each of these steps.

The different types of cryptocurrency trading

The first step is to decide between long term or short term cryptocurrency trading. Both are very different.

Long-term trading

BTC wallet vector icon blue

Long-term traders buy and hold cryptocurrencies over a long period of weeks, months or even years, with the intention of selling at a profit or using it later.

If you believe the value of a cryptocurrency will grow in the long run, and don’t want the stress of actively trading, then this might be your style, and a good first step may be learning how to safely buy and hold cryptocurrency.

Short-term trading

BTC trade graph vector icon blue

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, and lets you profit from cryptocurrency prices dropping as well as rising.

If this is what you’re looking for, you can either read on for a beginner’s guide or compare cryptocurrency trading platforms to get started.

Trading means accumulating more crypto or fiat currency through repeatedly buying low and selling high.

If you do it right, your funds grow. If you do it wrong, your funds shrink over time, as bad trades and changing markets eat away at your holdings.

The value of your cryptocurrency will rise and fall, but there’s no risk of immediately losing all your money to a bad trade.

  • Good for: Beginners, accumulating cryptocurrency, avoiding excessive risks, keeping things simple.
  • Not so good for: High-risk high-reward strategies, profiting from markets dropping.

Cryptocurrency trading for beginners

Before you can start trading, you need to be sure cryptocurrency trading is right for your circumstances, and that you understand the risks associated with it. You’ll also need to know what all the buttons do.

Fortunately, most cryptocurrency exchanges have similar-looking market pages, and you can safely ignore a lot of the information on the page.

Here’s an example from the Binance cryptocurrency trading platform, showing the Bitcoin/USDT market with the important parts annotated.

Swyftx Trading example

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 the two, in this particular case, is a place where you can click through to derivatives. It’s a completely separate market, where people trade futures contracts rather than Bitcoin itself.

Let’s zoom in on the bottom part, where you place buy and sell orders. There are two things to pay attention to here: your order type and the amount you want to buy or sell.

Swyftx Trading example

In this case, Binance offers three basic order types: market, stop-limit and OCO.

  • Market: Place a buy or sell order at the current market price, to execute immediately.
  • Stop-limit: Once you select this, you will be prompted to choose a separate stop price, and limit price. Once the asset (Bitcoin in this case) reaches the stop price, it will 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.

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 different order types, and slightly different rules about how they can be placed.

How to make a trading plan

The difference between gambling and trading is having a plan. Creating a plan is 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 using those to try to predict future movements.

Some patterns emerge frequently enough across multiple markets that they’re given their own names, such as resistance and support. But others are much more obscure, and are never given names of their own.

For example, if you think Bitcoin goes up when Ethereum goes down, or that Bitcoin rises when the US dollar falls relative to the Chinese renmibi, or anything else you can think of, that could be a pattern you can trade on.

2. Make a plan and stick to it

The two basic components of a trading plan are:

    • A place where you take profits
    • A place where you cut your losses

For example, someone’s basic plan might be to sell 33% of their Bitcoin for every $1,000 the price goes up (taking profits), or to immediately sell all their Bitcoin if prices drop below the current support line (cutting losses). To lay out 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 the real 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.

Compare cryptocurrency trading platforms

What to watch out for

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. The cryptocurrency markets are largely unregulated compared to more traditional markets. It’s an open secret that wash trading and market manipulation are common. They’re also a lot less liquid than many other markets, which can contribute to the volatility and make it easier for well-moneyed “whales” to manipulate prices, force liquidations and similar. Exchanges themselves are sometimes accused of manipulating their own markets against their own customers.
  • 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 means 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.

Compare cryptocurrency trading platforms

When choosing a cryptocurrency trading platform, consider factors such as whether it offers derivatives or leverage, what kind of order types it allows, and how easily it can integrate with cryptocurrency trading bots.

Where to trade cryptocurrency in the UK

Table: shows partner brands and other brands, sorted by popularity

Warning: your capital is at risk. The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results. This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade

All of the following platforms are available in the UK and offer cryptocurrency trading.

Name Product Deposit methods Fiat Currencies Cryptocurrencies
Cryptocurrency
Electronic Funds Transfer
Bank transfer (SEPA)
Wire transfer
Fiat currencies
GBP, AUD

9
cryptocurrencies

Credit card
Debit card
Neteller
PayPal
Wire transfer
Online banking
EUR, GBP, NZD, USD, AUD, CAD, HKD, SGD, CHF, NOK & 5+ more

16
cryptocurrencies

Disclaimer: Volatile investment product. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Copy the trades of leading cryptocurrency investors on this unique social investment platform.
Bank transfer
Credit card
Debit card
Bank transfer (SEPA)
Wire transfer
GBP, EUR

96
cryptocurrencies

BC Bitcoin is a UK-based cryptocurrency brokerage that buys and sells more than 100 different cryptocurrencies.
Credit card
Debit card
Bank transfer (SEPA)
SWIFT
USD, EUR, AUD, CAD, GBP, JPY

10
cryptocurrencies

Founded in 2013, CoinMama lets you buy and sell popular cryptos with a range of payment options and quick delivery.
Cryptocurrency
USD, GBP, CAD, EUR, CNY, RUB, TRY, NGN, UAH, KZT & 23+ more

202
cryptocurrencies

Trade an extensive range of reputable coins on this world-renowned exchange, popular for its high liquidity and multi-language support.

US residents: As of September 2019, US-based users can only trade USD on the American dollar onramp of Binance, Binance.US.
UK residents: In addition to normal crypto trading services, Binance offers margin lending. As this is a regulated activity which they are not authorised to offer in the UK, we advise you not to use this service. If you're interested in margin trading, see authorised providers.
AdvCash
Credit card
Debit card
Neteller
Payeer
USD, EUR, GBP, CAD, JPY

9
cryptocurrencies

Buy Bitcoin and other popular cryptocurrencies with credit card or debit card on this digital cryptocurrency exchange.

US residents: Restricted in the following states - NY, CT, NM, WA, HI, AL, VT, FL, AK, NV.
Cash
Credit card
Cryptocurrency
Neteller
Bank transfer (SEPA)
SOFORT
EUR, GBP, CHF, USD

34
cryptocurrencies

A European exchange which enables users to pay in EUR, GBP, CHF and USD through a variety of payment platforms.
Bank transfer
Credit card
Debit card
Neteller
GBP, EUR

4
cryptocurrencies

Buy and sell bitcoin in GBP or EUR with credit card, debit card and bank transfer payment options.
Bank transfer
NZD, GBP

2
cryptocurrencies

A cryptocurrency savings platform where users can deposit regular bank payments between 10 - 2,000 GBP to save BTC, ETH or XEM.
Binance Jersey Cryptocurrency Exchange
Bank transfer
Cryptocurrency
EUR, GBP

2
cryptocurrencies

Use your GBP or EUR to buy bitcoin and Ethereum through a platform launched by Binance.
loading

Compare up to 4 providers

Back to top

    Ask an Expert

    You are about to post a question on finder.com:

    • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
    • finder.com is a financial comparison and information service, not a bank or product provider
    • We cannot provide you with personal advice or recommendations
    • Your answer might already be waiting – check previous questions below to see if yours has already been asked

    Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

    By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

    Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
    Go to site