Quick answer
Crypto trading is the buying and selling of cryptocurrencies like Bitcoin, Ethereum, and altcoins to profit from price movements. Traders either buy spot tokens on an exchange (with self-custody) or speculate on price via CFDs without ownership. Crypto markets run 24/7 with high volatility, requiring strict risk management, position sizing, and stop-losses.
Crypto trading involves buying and selling cryptocurrencies like Bitcoin and Ethereum according to a strategy designed to make you money. The goal is to consistently profit from price fluctuations by buying when they are lower and selling when they are higher. This is no different from any other type of trading; it’s just that this time the asset you are buying and selling is a cryptocurrency.
Key Points
Crypto trading can be done in two main ways: on an exchange or by trading CFDs.
Trading on an exchange involves buying cryptocurrencies with a fiat currency and then selling at the right market price in the future.
Trading CFDs is slightly more complex and involves speculating on changes in the value of a cryptocurrency without owning any yourself.
As with all forms of trading, there is an inherent level of risk with crypto trading that needs to be carefully and strategically managed
Crypto Trading on Exchanges
Buying and selling cryptocurrencies on exchanges is a common approach to trading and involves the following key points:
You will buy and sell cryptocurrencies at the current market price on an exchange. This is known as a spot market.
When you buy cryptocurrencies in this way, you own them. You can use them in place of fiat currency if you wish, or you can hold them and trade them.
You will need an exchange account that allows you to purchase cryptocurrency with fiat currency, and a crypto wallet to store your purchases.
Having a strategy in place to enter the market when it is low and exit when it is high is the fundamental goal of crypto trading on exchanges. This is the same as trading any other asset.
Crypto Trading with CFDs
A Contract For Difference (CFD) is a financial tool that allows you to speculate on price changes without owning the asset itself. In this case, you are effectively making a financial bet on whether the value of a cryptocurrency will go up or you down. This approach provides several additional options to standard exchange-based trading:
Leverage: You can take up much larger positions with considerably smaller starting investments. Understanding excessive risk exposure through improper leverage is important here.
Long Positions: This is where you buy if your research indicates that the value of the cryptocurrency is about to go up.
Short Positions: If your market research indicates a price drop is about to occur, you will sell while the market is still high.
CFD trading with cryptocurrencies is often more complex than trading on exchanges. For example, a large institutional investor selling off all of their cryptocurrency can move the market and cause the price to drop significantly.
Want to Enter the Crypto Market?
Volity exists to make entering the market as quick and easy as it should be. If you want to trade crypto CFDs in a way that maintains your confidentiality and security, our platform is ready and waiting.
Because we want you to benefit from using our platform, here are the key things you should know about crypto trading:
Market Volatility: All markets can experience volatility, and crypto trading involves managing periods of high volatility and rapid price changes.
Market Research: Our comprehensive range of indicators and analysis tools allows you to constantly improve your understanding of the market.
Risk Management: Even elite traders will see certain trades fail. Managing your risk exposure ensures that one change in the market cannot wipe you out.
Reading our guide on how to start crypto trading will walk you through the next steps so that you can understand where to go next.
