HOW TO TRADE CRYPTOCURRENCIES?-TadingBrokersView
Pick a crypto currency you want to invest in
Pick a platform for cryptocurrency trading
Decide how you want to store your crypto currencies
[site-breadcrumb]
How to Start Trading Cryptocurrency
If you’re here, you’re probably wondering how crypto trading works and how you can get started. Great — let’s walk through your main options and, just as importantly, the risks that beginners often overlook.
Many traders are drawn to the cryptocurrency market because of its extreme price swings. High volatility can create opportunities for substantial gains in a relatively short time. However, that same volatility also makes crypto trading one of the riskiest financial activities, especially for newcomers. On top of that, getting started often requires a certain level of technical understanding, from using digital wallets to navigating trading platforms.
Because the crypto market moves quickly and unpredictably, profitability depends on accurately reading market sentiment and timing your trades well. Unlike traditional stock exchanges, the crypto market operates 24/7, meaning you can buy and sell at any time of day or night. While this constant availability can be appealing, it also increases the temptation to overtrade. Additionally, the generally lighter regulatory framework in many jurisdictions makes market entry relatively easy — but it also increases the level of personal responsibility and risk.
Before jumping in, there are several important factors you should carefully evaluate. Let’s break them down.
How to trade cryptocurrencies?
Pick a crypto currency you want to invest in
Most cryptocurrency traders go with the two coins that have the biggest market capitalization, Bitcoin and Ethereum. These two currencies dominate the cryptocurrency market and are the best-known coins. However, smaller, more obscure cryptocurrencies might also have great technology or ideas underpinning them, and as they are usually low-priced, they can provide an alternative investment opportunity. You might of course decide to hold more than one type of cryptocurrency.
How to trade cryptocurrencies?
Pick a platform for cryptocurrency trading
Choose Where and How You Want to Trade Crypto
Your first step is deciding whether to trade cryptocurrencies through a dedicated crypto exchange or via a traditional brokerage platform.
Crypto Exchanges
Dedicated exchanges such as Coinbase, Binance.US, Gemini, and Coinmama allow you to buy and sell digital assets directly. Opening an account typically takes just a few minutes. You’ll need to provide basic personal details and a funding method, such as a bank account or debit/credit card. Most platforms also require identity verification before enabling trading.
When choosing an exchange, compare transaction fees carefully and review the security features offered. Also remember that not every platform lists every cryptocurrency, so it’s worth confirming that your preferred coins are available before signing up.
Traditional Brokers Offering Spot Crypto
Only a limited number of mainstream brokers currently support direct (spot) cryptocurrency trading. Robinhood was one of the first widely recognized brokers to introduce Bitcoin trading, and it does not charge commissions on crypto transactions (availability varies by state). TradeStation and eToro also provide cryptocurrency access.
Different Ways to Gain Crypto Exposure
Cryptocurrencies can be traded or accessed in multiple formats. Here are the main ones:
1. Spot Trading
This involves directly buying and owning the actual cryptocurrency. You control the asset and can transfer it to a wallet if desired.
2. CFDs (Contracts for Difference)
Many online brokers offer crypto exposure through CFDs. With CFDs, you speculate on price movements without owning the underlying coins. One advantage is that CFD brokers are typically regulated by financial authorities, which may provide an additional layer of oversight. However, CFDs carry their own risks, especially due to leverage.
3. ETFs and ETNs
Some Exchange Traded Fund and Exchange Traded Note products track individual cryptocurrencies or baskets of digital assets. These instruments allow investors to gain exposure without directly handling wallets or private keys, making them appealing to more traditional investors seeking a familiar structure.
4. Bitcoin Futures
You can also trade Bitcoin futures contracts, available through brokers such as TradeStation. Futures trading is generally more complex and better suited to experienced traders due to higher risk and leverage.
5. Digital Asset Managers
Another route is investing through a crypto-focused asset manager like Grayscale Investments. Its publicly traded trusts, including the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Classic Trust (ETCG), trade over the counter and can be purchased through many discount brokerage accounts.
Before diving in, take time to understand which structure aligns with your risk tolerance, technical knowledge, and investment goals. Crypto markets move quickly — and choosing the right access point can make a meaningful difference in both cost and risk exposure.
How to trade cryptocurrencies?
Decide how you want to store your crypto currencies
Cryptocurrency exchanges come with a wallet where you can keep your digital currencies. You can also decide to move your crypto coins to your own wallet, which means you are in better control of them. Wallets are only relevant for spot crypto trading; when trading cryptos as CFDs, ETFs/ETNs or futures, you only get exposure to crypto price movements but don’t actually own the coins, therefore you don’t need to worry about storage.
Think about what kind of wallet works best for you; we explain the main types of crypto wallets here.
In short, hot (online) wallet storage works like a bank account, while a cold (offline) wallet is much like cash kept in your home safe. Hot wallets are more vulnerable to online theft or hacking, but they are easier to access. You will get two keys to your wallet. One is a public key, which is the address where the coins will be sent, and you are free to share it. The private key, however, should never be shared because you may lose your funds if someone gets hold of it.
Depending on how comfortable you are with risk and what your aim is with cryptocurrency trading, you should choose your trading strategy carefully. One popular strategy in the Bitcoin community when trading crypto is “HODL”, which basically means holding on to the currency for the long term. The name comes from a meme-inspired intentional misspelling of the word “hold”. You can also opt for a short-term strategy, which requires you to follow the cryptocurrency market very closely and react to any possible changes very quickly.