What is crypto trading and how do you trade cryptocurrencies?

Discover more about trading the volatile – and risky – cryptocurrency markets. Learn how to take a position with CFDs, and then see an example of a crypto trade on ether.

What’s cryptocurrency trading?

Cryptocurrency trading is the buying and selling of cryptocurrencies on an exchange. With us, you can trade cryptos by speculating on their price movements via CFDs (contracts for difference).

CFDs are leveraged derivatives – meaning that you can trade cryptocurrency price movements without taking ownership of any underlying coins. When trading derivatives, you can go long (‘buy’) if you think a cryptocurrency will rise in value, or go short (‘sell’) if you think it will fall.

By contrast, when you buy cryptocurrencies on an exchange, you buy the coins themselves. You’ll need to create an exchange account, put up the full value of the asset to open a position, and store the cryptocurrency tokens in your own wallet until you’re ready to sell.

How do cryptocurrency markets work?

The cryptocurrency market is a decentralised digital currency network, which means that it operates through a system of peer-to-peer transaction checks, rather than a central server. When cryptocurrencies are bought and sold, the transactions are added to the blockchain – a shared digital ledger that records data – through a process called ‘mining’.

What moves cryptocurrency markets?

Cryptocurrency markets move according to supply and demand. However, as they’re decentralised, they tend to remain free from many of the economic and political concerns that affect traditional currencies. While there is still a lot of uncertainty surrounding cryptocurrencies, the following factors can have a significant impact on their prices:

• Supply: the total number of coins and the rate at which they’re released, destroyed or lost
• Market capitalisation: the value of all the coins in existence and how users perceive this to be developing
• Press: the way the cryptocurrency is portrayed in the media and how much coverage it is getting
• Integration: the extent to which the cryptocurrency easily integrates into existing infrastructure such as e-commerce payment systems
• Key events: major events such as regulatory updates, security breaches and economic setbacks

Learn why people trade cryptocurrencies

Cryptocurrencies are notoriously volatile. For traders using leveraged derivatives that allow for both long and short positions, large and sudden price movements present opportunities for profit. However, at the same time, these also increase your exposure to risk. In short, the more volatile the market, the more risk you carry when trading it.

With IG, you can trade cryptocurrencies via a CFD account – derivative products that enable you to speculate on whether your chosen cryptocurrency will rise or fall in value. Prices are quoted in traditional currencies such as the US dollar, and you never take ownership of the cryptocurrency itself. CFDs are a leveraged product, which means you can open a position for just a fraction of the full value of the trade. Although leveraged products can magnify your profits, they can also magnify losses if the market moves against you.

When trading cryptocurrencies with us, you can:

• Access real-time pricing. We derive our prices from several exchanges, and they’re calculated on a continuous basis
• Get prices reflective of the underlying market. Because our prices are based on real markets, in real time, they always reflect actual market sentiment
• Trade with derivatives. With our CFD account, you’ll never own actual cryptocurrencies. This means you get to trade without opening an exchange account or creating a wallet
• Hedge against adverse markets. As CFDs enable you to take short positions, you can hedge against losses on investments you already hold
• Obtain low spreads. We work to keep our spreads amongst the lowest in the market
• Use continuous charting. Our award-winning platform¹ offers cutting-edge HTML 5 charts and a selection of advanced indicators and drawing tools
• Enter and exit positions quickly. Owing to tight spreads and our fast execution, CFDs enable you to enter and exit trades quickly
• Trade on leverage and margin. CFDs are leveraged, giving you full market exposure at a fraction of the initial outlay required when buying actual cryptos. However, trading CFDs comes with a high risk of losing money rapidly due to leverage.
• Trade on a secure platform. You can utilise measures such as the two-factor authentication (2FA) to ensure you’re secure when trading online.

Learn more about the benefits of cryptocurrency trading

Pick a cryptocurrency to trade

With us, you can use CFDs to trade 11 major cryptocurrencies, two crypto crosses and a crypto index – an index tracking the price of the top ten cryptocurrencies, weighted by market capitalisation.

Our selection includes:

• Bitcoin
• Ether
• Bitcoin Cash
• Litecoin
• EOS
• Stellar
• Cardano
• Bitcoin Cash/Bitcoin
• Ether/Bitcoin
• Crypto 10 index
• Cardano
• Chainlink
• Polkadot
• Dogecoin
• Uniswap