How to trade cryptocurrency

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Last Updated on February 7, 2022 by Arty Fisher

Trading cryptocurrency is becoming increasingly popular. As the market capitalization of these digital assets grows, so does their trading volume and liquidity. In fact, daily trading volumes for some of these coins rival those seen in the stock market. This means that there are plenty of opportunities available to trade cryptocurrency.

However, trading crypto is not like trading stocks or forex. It requires a different set of skills and knowledge. There are also a lot more things to consider when trading cryptocurrency than there are with other financial instruments. If you are new to the crypto world, it can be difficult to know where to begin.

This guide explains where to begin trading cryptocurrency, 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.

What is crypto trading?

Crypto trading is the process of buying and selling cryptocurrencies in order to generate profit. It involves price speculation on whether a cryptocurrency will increase or decrease in value over time.

There are two ways to trade cryptocurrency:

Crypto-to-crypto. You trade one type of cryptocurrency for another type of cryptocurrency. For example, you may trade bitcoin for ether, litecoin or ripple.

Fiat-to-crypto. You trade fiat currency (i.e., traditional currency backed by a government) such as U.S. dollars for cryptocurrency. Some exchanges allow users to buy BTC using fiat currencies, such as U.S. dollars or euros, while other exchanges only allow users to buy cryptocurrencies using other digital assets, such as ether.*

How to trade cryptocurrency:

If you want to trade cryptocurrency you need:

  • A cryptocurrency wallet (or two). For example, Atomic Wallet, MetaMask or Trust Wallet.
  • A cryptocurrency exchange (or two) to trade on. For example: Binance, Kraken or Bittrex.
  • A good internet connection.
  • A method of payment.

This can be a bank account or debit card if you’re buying at the exchange, or it could be an existing cryptocurrency account if you’re buying from another user via a site like Localbitcoins. It could also be cash if you’re meeting in person.

Things to know before you start crypto trading

The first step is finding an exchange that offers the types of trades you want. For example:

If you want to trade stocks or other types of securities, you’ll need a brokerage account.

If you want to trade cryptocurrencies but don’t have the technical knowledge or the time to do it yourself, consider hiring a professional trader.

If you want to trade futures contracts, look for an exchange that offers those.

If you want to trade options on stocks or futures contracts, look for an exchange that offers those.

If you want to trade binary options or social trading, look for an exchange that offers those.

Get started!

To start trading cryptocurrency you need to choose a cryptocurrency wallet and an exchange to trade on. From there it is as simple as getting verified with the exchange and funding your account (a process that can take a few days).

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