What is Cryptocurrency Trading? Best Trading Platforms for Cryptocurrency

What is Cryptocurrency Trading? Best Trading Platforms for Cryptocurrency

 

The cryptocurrency market continues to be a popular asset for traders these days.

More and more people are starting to trade crypto across the world after the bitcoin popularity in 2018.

But what exactly is cryptocurrency trading? You may be asking yourself how to trade cryptocurrency? Or what is a good trading platform? 

 

A lot of traders also want to know what the difference is between crypto trading and buying cryptocurrencies? Plus with so many crypto coins available, exactly how many types of cryptocurrency are there?

In this section of our guide, we will answer all the questions listed above plus more you may have about it.

We will also show you some of the best cryptocurrency trading platforms.

Try Crypto Trading

*Your capital might be at risk

And if you’re interested, we’ve done a short introduction about what is online trading and crypto platforms on the homepage which you might have seen.

Let’s get started!

What is Cryptocurrency Trading

Let’s begin with the key questions: What is cryptocurrency trading? & How can I trade Bitcoin?

When talking about virtual coins, you should know that there is a big difference between buying cryptocurrencies and investing in cryptocurrencies.

If someone buys a cryptocurrency in a platform, they own it.

For example, let’s say you buy a Bitcoin, once the purchase is complete you’ll own the Bitcoin. You can also use that cryptocurrency to buy other goods or services in the market.

If the value of that Bitcoin rises in the market, you’ll have an increased value and the opportunity to buy more things with it.

However, the amount of platforms in the market which offer products that are payable using crypto is quite limited.

This is a reason why more people have started investing in crypto: so they can speculate on their value.

 

cryptocurrency trading

Sources: Coinmap.org and Forbes.com

 

Investing works exactly like Forex&CFDs trading. Bitcoin and other cryptocurrencies can be traded as CFDs in online platforms.

The most important things to do is to trade with the right strategy and to choose the best broker.

How to Trade Cryptocurrency

When investing, you should know that to get started with Bitcoin and cryptocurrency trading, you just need to follow 3 simple steps:

  1. Find the best trading platform for cryptocurrency
  2. Find the cryptocurrency trading assets
  3. Have a good cryptocurrency trading strategy

Let’s go through each point:

Best Trading Platform for Cryptocurrency

To trade cryptocurrency is easy and similar to the normal traditional method.

One of the first things you need to do to get started is to open an account with a regulated crypto exchange platform.

Today all the leading online platforms offer the chance to trade cryptocurrencies. Bitcoin is normally the most popular one to trade.

Here you can find a list of the most important crypto plus a list of the best trading platform for cryptocurency to trade with. All the brokers are fully regulated and secure to trade with. 

$ 100 Deposit
  • Minimum Deposit:$100
  • Ratings:5 star
  • Demo Account:
  • *:*76.4% of Retail CFD accounts loss money.
$ 200 Deposit
  • Minimum Deposit:$200
  • Ratings:5 star
  • Demo Account:
  • *:*75% of Retail CFD accounts loss money.
$ 10 Deposit
  • Minimum Deposit:$10
  • Ratings:5 star
  • Demo Account:
  • *:*Capital at risk
$ 200 Deposit
  • Minimum Deposit:$100
  • Ratings:5 star
  • Demo Account:
  • *:*Capital at risk
Comparison Table Includes
  • Minimum Deposit:
  • Ratings:
  • Demo Account:
  • *:
  • Minimum Deposit:$100
  • Ratings:5 star
  • Demo Account:
  • *:*76.4% of Retail CFD accounts loss money.
  • Minimum Deposit:$200
  • Ratings:5 star
  • Demo Account:
  • *:*75% of Retail CFD accounts loss money.
  • Minimum Deposit:$10
  • Ratings:5 star
  • Demo Account:
  • *:*Capital at risk
  • Minimum Deposit:$100
  • Ratings:5 star
  • Demo Account:
  • *:*Capital at risk

PLUS500

$ 100 Deposit

ETORO

$ 200 Deposit

OPTIONBD

$ 10 Deposit

SWISS

$ 200 Deposit

Find the Cryptocurrency Trading Asset

Once you’ve opened an account, you need select and find the crypto you want to trade. To do this search for the cryptocurrencies available by typing one of the following crypto names:

The list above features some of the most popular cryptos available to trade. So when searching in the asset section of a platform, you just need to type LTC or BTC for example and the crypto should be found.

After deciding which virtual currency you want to trade on the platform, you need to decide if you want to sell or buy.

As we’ve explained in how to trade Forex, crypto trading involves the financial leverage concept. This means that there are also lots used on cryptocurrency trading platforms.

So for instance, if you want to exchange 1 lot of Bitcoin you need enough money in your account to do it.

Let’s understand this better:

A common mistake people make is to think of crypto trading as the same process as when buying cryptocurrencies- but these are 2 different things!

Exchanging cryptocurrency is not like buying cryptocurrency!

In fact traders see cryptocurrencies as a normal currency pair. For example EUR/USD.

If you see it like this you are on the right track. Not let’s look at how the basic points you should know when it comes to opening a trade.

Try Crypto Trading

*Your capital might be at risk

 

How do you buy and trade cryptocurrency?

One thing to know is that all the measurements such as 0.01 BTC or 1 Bitcoin have nothing to do with investing. What is important are the lots in these platforms.

So all the crypto trades are measured in lots, mini lots or micro lots.

Another crucial thing to set up in crypto trading is the leverage. Most  brokers offer a fixed general leverage on their platform for all the assets.

This means that a trader can use the same leverage to trade both EUR/USD and Bitcoin.

However, a few brokers also have different leverages available which a trader can choose for each separate position.

Once the crypto asset, volume and the leverage are all decided, it’s time to open the position.

There are just two choices you can make: buy or sell. 

After you’ve selected either buy or sell, you’ll be able to set up the relative stop loss and take profit for every single position. These two settings will help you to close the trade automatically.

The stop loss will close the trade when it reaches a loss at the selected price you’ve set. Whereas the take profit will close the trade automatically when it reaches the selected profit price.

Finally, when you decide it’s time to close the position manually in your platform, you just need to click the ‘X’ near the open trade and in less than one second the position will close.

Try Crypto Trading

*Your capital might be at risk

 

Cryptocurrency Trading Strategy

crypto trading strategy

For cryptocurrency trading, it’s very important to have a good strategy to use in your chosen platform. As we have explained, crypto trading is very similar to traditional trading.

This means that traditional strategies also work for crypto trading.

There are many strategies available, but because of the high volatility cryptocurrencies have, it’s very important to select the right one.

Day trading, scalping and Bollinger Bands indicators might not be very useful for bitcoins and cryptocurrencies because these are short-term strategies.

Some of the best strategies to follow in crypto trading are long-term strategies. This is a classic move to buy when the price is low and hold till it grows could be the best option.

Also analysing the trends that affected Bitcoin and Ethereum in 2017 can help you understand why we are saying that.

For instance, for a long time the Bitcoin price remained steady then suddenly boomed in value at the end of 2017. This is a good example of when a long-term strategy would have worked.

Because cryptocurrencies are still a relatively young asset in the market, there is always the chance that they could boom again in value another time.

This is why a long-term strategy could be the winning option.

Try Crypto Trading

*Your capital might be at risk

 

Best Trading Platform for Cryptocurrency: eToro

When starting your trading experience, one of the best cryptocurrency trading platforms is eToro.

In eToro it’s possible to trade cryptos such as Ethereum, Litecoin, Ripple, Dash and Neo. (Note*: Cryptocurrencies are not offered as CFDs for clients under FCA)

A trader can invest in Bitcoin using the same way they trade CFDs.

A deposit can be made with credit card, wire transfer or Moneybookers such as Neteller.

In case you are not an expert trader and you’re not sure what to do, don’t worry!

With the eToro platform, there is the opportunity to trade using the Crypto tool.

 

etoro copyfund

(*Past performance is not an indication of future results.)

This new tool consists of a Fund made up of different cryptocurrencies. There are various funds to choose from in the platform and each of them has different cryptocurrencies in it.

For example, some could have 40% of Bitcoin, others just 10% of them.

All the cryptocurrencies included in a fund must be worth at least $1 million. This means that there are just major currencies in it.

If a crypto decreases in value and is worth less than $1 million, it’ll be deleted from the fund.

However, it’s possible to invest with a small quantity of money on the platform, so you don’t need millions.

When you’ve bought your percentage of the fund, you can sell it any time without any restrictions.

A crypto CopyFund has the following currencies in it:

  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Dash

Why do People Only Buy Bitcoin?

In 2017 a lot of people started to invest and buy Bitcoin. The Bitcoin market boomed, with prices starting to increase in May 2017.

But why did people just invest in Bitcoin and not in other cryptocurrencies?

The answer is very simple. Bitcoin is the most famous and recognised cryptocurrency compared to other existing ones.

statistics crypto trading

This graphic shows data gathered from all the investing platforms. It clearly shows that Bitcoin is the main cryptocurrency in terms of Market Capitalization, Value and Growth Rate.

For 6 months in 2017, Bitcoin grew from $500 up to $18.000 which represents a growth of 3500%!

Nothing in financial history has had such an incredible growth as Bitcoin. Following the Bitcoin lead, the 2nd and 3rd most popular cryptocurrencies for 2017 were Ethereum and Ripple.

This data shows that not only was Bitcoin was the most popular, but also the most profitable digital currency to invest in.

In 2018 the general cryptocurrency market situation had a big drop. A lot of people say that the Bitcoin bubble exploded, others said it was just a temporary drop before a second growth.

At the same time, a lot of secondary cryptocurrencies appeared in many platforms. Some examples include Neo, Dash and Cardano.

The price of those new ICOs was fairly low in 2018, but they still have potential to grow and become as popular as Bitcoin in a few years time.

However, brokers have added them to their trading platforms, and they’ll continue to add new ICOs in the future if they look promising.

It’s always a good idea to get a full picture of what’s happening in the market so that you can understand which crypto has got good potential.

Try Crypto Trading

*Your capital might be at risk

 

Cryptocurrency Trading or Traditional Trading?

crypto trading

A lot of people are asking themselves if cryptocurrency is really worth, and if it’s really better than traditional trading.

There isn’t a clear answer to this question.

In 2017, after the Bitcoin boom, we can definitely say that crypto trading was worth doing. Especially as prices were increasing and there was more potential compared to traditional trading.

The prices of different crypto coins grew excessively for about 8 months. This brought a lot of profits to traders across the various trading platforms.

Investing in cryptocurrency was considered easy money by most of the traders.

But after the crash, we saw that at the beginning of 2018 the general mindset had changed. People started to move from crypto trading, back to the traditional assets.

Try Crypto Trading

*Your capital might be at risk

Crypto Trading 2020

Are there any events in 2020 that affected the crypto trading world?

With the progress of Libra crypto still being worked on, other important companies have also considered how they can get involved with the cryptocurrency market too. 

For example, like Facebook, JPMorgan Chase also announced their intention to launch in 2020 their own crypto coin- the JPM Coin. Currently the JPM coin is still being worked on, but when it’s released it’s likely that the launch will affect the whole crypto market.

These events are likely to attract a lot of media scrutiny as well as introducing cryptocurrency to the mainstream. So the result of this could be that crypto prices increase due to the news and the development of this situation.

It’ll be interesting to see if any other multinational companies decide to launch their own crypto coins. However, it’s likely that we’ll see other official bodies and Governments accept cryptocurrency a bit more.

Another big 2020 event that is likely to affect the cryptocurrency market was the scheduled Bitcoin halving.

Halvings are always a big event for investors to follow as the Bitcoin prices have tended to surge after a halving has taken place.

However, with the economic aftershock of COVID-19 being felt in the financial markets, some investors think that the halving may not lead to such a big price increase. Who knows what will happen in mid May, but the Bitcoin halving is normally the catalyst for a price surge.

Although the crypto market can never be predicted, with so many events happening, we are likely to see a lot of price movement for the upcoming year.

Try Crypto Trading

*Your capital might be at risk

 

Cryptocurrency Situation in 2021

2020 showed a promising price growth for crypto, especially for Bitcoin. Let’s see what can happen in 2021.

December 2020 saw the coin value surpass an incredible $18,000! This was partially due to a big news announcement made by Facebook that they would be launching their own crypto coin called Libra and the Covid pandemic.

Soon after the news was announced, the Bitcoin prices soared.

Most people think this was likely due to investors realising that even a social media giant like Facebook believes in the future digital currency too.

At the same time, the pandemic which affected the world in 2020, brought a lot of instability in the traditional markets and trading platforms, pushing even more people to invest in cryptocurrencies which have been seen as a safer asset.

What we can say now is that there isn’t a fixed rule to follow, but the best thing to do in finance is diversification.

This means that it’s better to take a portion of your total capital in the trading platform for cryptocurrency and use it only for traditional trading. The remaining portion can be used for crypto trading, which still has potential, but is still fairly new and volatile on the marketplace.

Try Crypto Trading

*Your capital might be at risk

 

Marco Sbalchiero

Author of this article and founder of Tradingonlineguide.com

My aim is to help you increase your trading knowledge with helpful content. I come from an economic background and have a strong passion for forex trading. With more than 6 years in the online trading world, I want to share my financial knowledge so that anyone can develop their investment skills.

In my spare time I enjoy cooking and travelling.

Here you can learn more about our review methodology.

 

FAQ's

Crypto Trading is very similar to the normal currencies or shares trading. Once you have opened an account on a platform and made the first deposit, you can trade.
On trading, you can decide to sell or buy a crypto. Let’s say you want to trade in Bitcoin.
If you buy, you will expect the price to go up, and thanks to that you can make a profit. If you sell, you expect the price the go down, and you can make a profit for that.
On trading you speculate on the price movement of cryptocurrencies, and you won’t own any of them.

Crypto trading can be profitable and has been profitable for many traders in the past.
Trading Bitcoin or other cryptos is the same a normal trading. It can be profitable only with a good strategy and good risk management.
On 2017-18 this type of trading has been very profitable for a lot of people. This has been thanks to the Bitcoin boom where the price went from few thousands dollars, up to almost $20.000. Who invested in that period has done a very profitable investment.
This means that only on the right period and with the right strategy this trading can be profitable.

To this question, there isn’t a specific answer. A lot depends on how much money you have invested. For example, if a person invest $100 will have a certain profit, if the person invests $1.000 will have a profit 10 times bigger.
If we want to try to give an answer based on the % for sure during the crypto boom back in 2017 people have had up to 2000% of profits, some others who tried some years later might have lost some money.
A lot depends also on the time and market you decide to invest on.
This concept is the same for every type of investment and market. All depends on the amount of money invested and the trading decisions made.

If you want to trade with Bitcoin, Ethereum, Litecoin or other cryptos, the best platform is Plus500.

The broker is one of the most known around the world. Its first deposit is only $100 and there are all the cryptocurrencies available. It has been the first trading platform to add them to its assets.

The company is fully regulated and safe, you can trade in Bitcoin, Ethereum, Ripple, NEO, Litecoin, Dash, Stellar, Cardano and many more.

On this platform, you will trade cryptos, but you won’t buy them. On Plus500 you can’t have a wallet. The platform is only for trading on the price movement of cryptos compare to each other.

For instance, you will find assets called: BTC/ETH. This means that the prices are put on comparison and you will trade deciding which one will get stronger on the other.