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How to trade cryptocurrency – a beginner’s guide

Learn everything you need to know before you start trading bitcoin, Ethereum or any other cryptocurrency.

The value of cryptocurrencies is increasing. In 2017, bitcoin (BTC) grew from AU$1,014/BTC to over AU$14,000/BTC. With such growth comes an increase in market trading, which in turn helps the currency keep growing.

It can be a good choice for cryptocurrency beginners because you don’t need your own cryptocurrency wallet, and you can get a feel for the market movements without needing to buy it outright.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Where to trade cryptocurrency in Australia

A range of established forex exchanges and brand new platforms are embracing cryptocurrency trading. Find the one with the features that work for you, and that suits your trading style.

All of the following platforms are available in Australia and offer cryptocurrency trading.

Name Product Deposit methods Fiat Currencies Available Cryptocurrencies
Cash, BPAY, POLi, Cryptocurrency
AUD
BTC, BCH, ETH, XRP, ADA, XEM, LTC, XLM, MIOTA, TRX, DASH, NEO, XMR, EOS, QTUM, BTG, LSK, ETC, XVG & over 60+ more
CoinSpot is an Australian-based marketplace that allows you to easily buy, sell or trade more than 100 cryptocurrencies.
Electronic Funds Transfer, SWIFT, Cryptocurrency
AUD, NZD, USD
BTC, BCH, ETH, LTC
Trade AUD and other fiat currencies against BTC, BCH or ETH at competitive rates.
Cryptocurrency
BTC, XRP, USDT, ETH, NEB, XVG, TRX, NEBL, ETH, NEO, FUN, ETC, BCC, POE, DASH, ELF, ICX, BNB, ZRX, APPC & 80+ more
Trade an extensive range of reputable coins on this world-renowned exchange, popular for its high liquidity and multi-language support.
Bank transfer, POLi, Cash deposit* *Westpac Bank branches only
AUD, GBP, USD
BTC, BCH, ETH, LTC, XRP, NEO
HiveEx.com is a global over-the-counter (OTC) cryptocurrency brokerage specialising in high-volume trades of $10,000+.
Hive Empire Trading Pty Ltd is a related party of Hive Empire, which owns finder.com.au.
Cryptocurrency
-
BTC, ETH, HT, LTC, BCH, XRP, DASH, IOST, EOS, TRX, ETC, OCN, ONT, ELF, ABT, CMT, ELA, ZEC, PROPY, OMG & 75+ more
Huobi.pro is a digital currency exchange that allows its users to trade more than 190 cryptocurrency pairs.
Credit card, Debit card, SWIFT, SEPA, Cryptocurrency
USD, EUR, RUB, GBP
BTC, DASH, ETH, XRP, ZEC
Use your USD, EUR or RUB to buy and sell cryptocurrency at competitive exchange rates and with high maximums for verified accounts.
Cash, Electronic Funds Transfer, POLi
AUD
BTC, BCH, ETH, ETC, LTC, DASH, XMR, XRP, ANT, REP, BNT, BAT, BTS, BLK, CVC, CLAM, DCR, DGB, DGD, DOGE & 35+ more
Buy a variety of cryptocurrencies through an Australian exchange platform through POLi, Cash or Electronic Funds Transfer.
Cryptocurrency, Bank transfers
AUD, NZD
BTC, ETH, LTC, XRP, POWR
A cryptocurrency exchange that supports Australian and New Zealand customers, where users can pay in NZD and transactions in AUD have no withdrawal or deposit fees.
Cryptocurrency, Wire Transfer
New account holders must now deposit fiat/crypto equivalent to US$10,000 to trade.
USD, EUR
BTC, BCH, BTG, TRX, GNT, AVT, DASH, DATA, EDO, EOS, ETC, ETH, ETP, LTC, MIOTA, NEO, OMG, QTUM, SAN, USDT, XMR, XRP, ZEC, BAT, ZRX, FUN, MANA, SPANK, TNB, RLC, RCN, REP, ELF, AID, SNGLS, SNT, QASH, YOYO, MITH
Spot trade all of the major cryptos on this full-featured exchange and margin trading platform.
Cryptocurrency
-
BTC, BCH, KCS, DRGN, DBC, XRB, ETH, PRL, LTC, SNOV, DENT, RPX, QLC, NEO, UTK, BNTY, ACT, POE, UKG, LA, LEND, VEN & 50+ more
Browse a variety of coin offerings in one of the largest multi-cryptocurrency exchanges and pay in cryptocurrency.
Credit card, Debit card
USD, EUR, RUB
BTC, BTG, BURST, BYC, CANN, CFI, CLAM, CLOAK, CLUB, COVAL, CPC, CRB, CRW, CURE, CVC, DASH, DCR, DCT, DGB, DMD, DNT, DOGE, DOPE & 140+ more
Use your credit or debit card to buy bitcoin and other cryptocurrency without having to verify your identity.
Credit card, Debit card
AUD, USD, EUR, GBP, CAD, CNY & 50+ more
BTC, BCH, ETH, LTC
Buy and sell bitcoin, Ethereum, Litecoin and Bitcoin Cash on one of the world's most renowned cryptocurrency exchanges.
Cryptocurrency, Bank transfer
JPY, USD, SGD, AUD, EUR, CNY, PHP, HKD, INR
BTC, ETH, QASH, XRP, BCH, NEO, UBTC, RKT, QTUM, BCH, DASH
A global exchange which offers users both cryptocurrency and fiat currency deposit options.
Cash, Credit card, Debit card
USD, EUR
BTC, ETH, BCH, LTC, ADA
Use USD/EUR to buy bitcoin and Ether with credit card or cash on the Coinmama cryptocurrency exchange.
Credit card, Debit card, Neosurf, Cashlib, Trustpay, ePay
USD, EUR, GBP, JPY, CNY, KRW, AUD, CAD, DKK, NOK, SEK, TRY, HKD, SGD
BTC, ETH, XRP, DASH, LTC, BCH, ETC, OMG, ZRX, CVC, BNT
Buy cryptocurrency with cash or credit card and get express delivery in as little as 10 minutes.
Cryptocurrency
-
BTC, BCH, DRG, UKG, ENJ, TRX, LDC, MGO, AMLT, EZT, LALA, IPSX, FLIXX, STU, 1WO, TPAY, ETH, WIN, LTC, SPHTX, RKT, UBTC, ETN, ECH, QASH, NEO, HAV, XRP, ETC, STAC, FLUZ, VZT, XEM, XLM, VET, BMC, ONG, FDX, XMR, DENT, MCO, IND, GAT, ZEC, CAN, STX, QTUM, OAX, IXT, STORJ, MTN, REP, FCT, DASH
Owned by the team behind QUOINEX, QRYPTOS is a global crypto-to-crypto platform which supports over 50 cryptocurrencies and offers negative trading maker fees to generate liquidity.
Credit card, Debit card, Cryptocurrency, Perfect Money, SEPA, Wire Transfer, Payza, CryptoCapital, Money Polo, Payeer, Giropay, Yandex Money & more
USD, EUR, RUB, PLN, UAH
BTC, BCH, ETH, ETC, XRP, KICK, DASH, WAVES, ZEC, XMR, LTC, DOGE, USDT
A UK-based cryptocurrency platform that provides buyers with a wide variety of payment options.
MoneyGram, Perfect Money, Western Union, Cryptocurrency, OKPAY
USD, EUR, RUB
BTC, ETH, LTC
Buy and sell crypto and other digital currencies on this global fixed-rate exchange.
Cryptocurrency, Payeer, Perfect Money, Qiwi
USD, EUR, RUB
BTC, BCH, ETH, LSK, LTC, XMR, XEM, DASH, BCC, DBIX, CLOAK, EMC, NEO, TIME, SHIFT, STRAT, DOGE, DTR, DGB, VOX, ESC, MONA & 140+ more
Trade at an exchange that has an extensive offering over 160 coins and numerous fiat and altcoin currency pairs.
Cryptocurrency *Powered by atomic swaps
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*Note that while the platform is under development, it is expected to support BTC, ETH, REP, ANT, BAT, EOS, SALT, CVC, DNT, SNT & 20+ more
Launching in 2018, Altcoin.io is a decentralised peer-to-peer cryptocurrency exchange powered by atomic swaps. Sign up now for early access.
Cryptocurrency
-
BTC, BTG, ETH, ETC, DASH, XRP, DOGE, XEM, LTC, XLM, NEO, ADA, EOS, QTUM, XMR, TRX, BCC, XVG, LSK, GEO & 250+ more
CoinSwitch allows you to compare and convert over 250 cryptocurrencies across all exchanges.
Bank transfer, Cash*, Cryptocurrency *Cash deposits only available at NAB branches
AUD
BTC
Spendher is an app founded in Australia which aims to streamline buying and selling bitcoins on your mobile, offering options to deposit AUD through bank transfer or cash deposits.
Credit card, Debit card
USD, EUR
BTC, BCH, ETH, XMR, ZEC, DASH, XRP, ETC, LTC, DOGE, XLM,1ST, ADX, AMP, ANT, BAT, BCN, BNT, BTG, CFI, CVC & 70+ more
Access competitive crypto-to-crypto exchange rates for more than 35 cryptocurrencies on this global exchange.
Wire Transfer, Cryptocurrency, Express Polish Post Office 24/7, Express ?abka Market, Express DotPay
USD, EUR, PLN
BTC, BCC, BTG, LTC, ETH, LSK, GAME, DASH, KZC, XRP, XIN
This Polish-based exchange offers a variety of accessible payment methods, including Express Polish Post Office 24/7 service and Express DotPay.
Credit card, Debit card, OKPAY, PayPal, Skrill, SOFORT
EUR, USD, CHF, GBP
BTC
Buy bitcoin through PayPal on one of the oldest virtual currency exchanges in the business.
Cryptocurrency, Payeer, AdvCash, Perfect Money, Capitalist, QIWI* Only available for RUB deposits
USD, RUB
BTC, BTG, DASH, ETH, LTC, DOGE, WAVES, LSK, BCC, TRX, NANOX, PAC, ZEC, XVG, EOS, ETC, RDD, TOKC, B2X, TTC & 400+ more
Pay in USD, RUB or trade crypto to crypto at this Russian-based cryptocurrency exchange with hundreds of coins listed.
Cryptocurrency, SEPA, SOFORT, MoneyPolo, Bank Wire* Domestic wire for CZK and PLN, SEPA only for EUR
EUR, PLN, CZK
BTC, BCH, LTC
Trade fiat currencies and cryptocurrency at this European-based exchange with options to pay through domestic bank wire, SEPA and SOFORT.
Bank account, Credit card, Debit card, eCheck, PayPal
USD
BTC
Buy bitcoin instantly with credit card, PayPal or bank account on this peer-to-peer lending platform.
OKPay, PerfectMoney, Yandex Money, Payeer, QIWI, Cryptocurrency
USD, EUR, RUB
BTC, XRB, ETH, DCN, BCH, NIO, TRX, DASH, COB, DOGE, PRIX, DSR, XCPO, LTC, VERI, LOC, NUA, PKT, PPT, ICO & 80+ more
Supporting over 100 coins, you can exchange a variety of cryptocurrency pairs on this peer-to-peer platform.
Cryptocurrency, Bank transfer
AUD
BTC, BCH, ETH, HSR, EET, DASH, FUEL, UBTC
An Australian cryptocurrency exchange, ACX enables you to buy bitcoin and other cryptocurrencies with AUD bank deposits.
Cryptocurrency
-
BTC, ETH, 18T, BUT, LXT, CDC, UUU, AAC, CNN, UIP, UC, GSC, IIC, MEX, EGCC, SHE
Owned by the team behind Huobi.pro, HADAX lets users vote for cryptocurrencies it should list.
Cash, Credit card, Cryptocurrency, Debit card, Flexepin, Neosurf, Neteller, M-PESA, PayPal, Perfect Money, WebMoney, Western Union, iDEAL, SEPA, Skrill, SWIFT
AUD, USD, EUR, GBP, CAD, CNY & 50+ more
BTC
Connect with bitcoin buyers and sellers through this peer-to-peer marketplace that accepts cash, credit and more than 300 other payment methods.
Cryptocurrency
-
BTC, BTG, DASH, ZET, XVP, XPM, WDC, VTC, VRC, UNO, TROLL, START, SLR, SLG, RDD, QTUM, PPC, POT, OK, NVC, NMC, NLG, NEOS & 25+ more
Trade an array of cryptocurrencies through this globally accessible exchange based in Brazil.
Cryptocurrency
-
BTC, BCH, ETH, LTC, DOGE, NEO, XMR, POWR, DASH, PIVX, XEM, OMG, GNT & 500+ more
Buy and sell hundreds of cryptocurrencies with minimal verification on this all-in-one, New Zealand-based exchange.
Electronic Funds Transfer, SEPA, Wire Transfer *payment methods vary per country
USD, EUR, GBP, JPY, CAD
BTC, BCH, ETH, ETC, XMR, DASH, LTC, XRP, XLM, REP, ICN, MLN, ZEC, USDT, GNO, EOS
Exchange multiple cryptocurrencies through a range of payment methods, including Electronic Funds Transfer, SEPA or Wire Transfer.
ACH Bank Transfer, Wire Transfer, SEPA * payment methods vary depending on fiat currency
USD, EUR, GBP
BTC, BCH, ETH, LTC
Buy and sell cryptocurrency at this US-based exchange which offers fiat currency payment options, including wire transfer, ACH bank transfer and SEPA.
Cryptocurrency
-
BTC, ETH, XVG, SC, XRP, DOGE, STRAT, XMR, ADA, OMG, ETC, BCC, XLM, DGB, UKG, QTUM, ZCL, RDD, LTC, NEO & 120+ more
Buy from one of the largest crypto to crypto exchanges with a selection of over 190+ cryptocurrencies.
Cryptocurrency
-
BTC, ETH, XRP, DOGE, XLM, ETC, STRAT, LTC, SC, DGB, BCH, LSK, XMR & 50 more
Trade various coins through a global crypto to crypto exchange based in the US.
Debit card, Credit card, Cryptocurrency, SEPA, Wire transfer, AstroPay
USD, EUR
BTC, BCH, LTC, ETH, XRP
A global cryptocurrency exchange that facilitates crypto to fiat transactions, where you can use EUR or USD to buy bitcoin and popular altcoins.
Bank transfer, BPAY, POLi
AUD
BTC, BCH, ETH, ETC, LTC, XRP
Browse the various coin offerings of this Australian based exchange, where coins can be purchased through AUD, LTC and BTC currencies.
Cash, POLi, Flexepin
AUD
BTC, ETH
Buy cryptocurrency from an Australian service through cash, POLi or Flexepin vouchers.
Credit card, Debit card, POLi, Cryptocurrency
AUD
BTC
Buy and sell on a platform based in Australia which sources bitcoin from all around the world.
POLi
AUD
BTC
Buy and sell bitcoin in AUD through POLi when using this exchange based in Australia.
Cryptocurrency
-
BTC, USDT, ETH, EOS, AE, BTO, BTS, CAN, HLC, SEER, XAS
Recently launched in Australia in late 2017, XBrick now offers its services globally and users can download its mobile trading platform to buy and sell cryptocurrencies.
Cryptocurrency
-
XLM, BTC, BCH, USDT, OMG, ZRX, KIN, MOBI & more
Stellarport taps into the Stellar Decentralised Exchange to provide buyers and sellers with access to XLM and various other cryptocurrencies.
Cash
AUD
BTC
An Australian bitcoin broker which offers quick and simple trading where no signup is required.
Credit card, Debit card, SEPA, SOFORT, SWIFT, Skrill, Dotpay, Unionpay
AUD, USD, EUR, SEK, HUF, JPY, GBP, NOK, HRK, CAD, CNY, CHF, CZK, RSD, TRY, BRL, DKK, PLN, RUB, ARS
BTC
Offering payment options such as credit card, SEPA and SWIFT, you can purchase bitcoin from this European-based exchange with an array of fiat currencies.
Cryptocurrency, Wire transfer
KRW
BTC, BTG, BCH, DASH, ETC, LTC, EOS, XRP, ETH, QTUM, TRX, ICX, VEN, XMR, ZEC, MITH
A global platform where users can make KRW and cryptocurrency deposits to purchase up to 15 popular cryptocurrencies.
Cryptocurrency, Wire Transfer
USD
TAAS, GNO, ANT, 1ST, HKN, BBT, WRC, AMM, OROC, CHSB, GLBX, BENJA
Orderbook is a decentralised cryptocurrency exchange and ICO platform where users can trade Ethereum-based ICO tokens.
Credit card, Debit card, Bank Transfer *GBP bank transfers halted
GBP, EUR
BTC
Buy and sell bitcoin in GBP or EUR with credit card, debit card and bank transfer payment options.
Cryptocurrency
-
BTC, BCH, RVN, LTC, ALQO, LCC, ECA, SMART, POLIS, BCO, COLX, IC, XP, BWK, HTML, QBIC, ZNY, DOGE, XSH, DASH & over 40+ more
Offering over 80 cryptocurrency pairings, CryptoBridge is a decentralised exchange that supports the trading of popular altcoins.
Cryptocurrency
-
BTC, BCH, BTG, ETH, ETC, FUN, 1ST, ANT, BAT, BNT, BLK, CVC, CLAM, DASH, DCR, DGB, DNT, DOGE, EDG, EOS, FCT, GAME & 25+ more
A global exchange where no account is needed to begin trading cryptocurrency to cryptocurrency.
PayPal, Moneygram, OKPAY, Perfect Money, SEPA, WebMoney, Western Union, Wire Transfer, Paxum, QIWI, Payeer
EUR, USD
BTC, ETH, ETC, ZEC
Cryptonit is a secure platform for trading fiat currency for bitcoin, Litecoin, Peercoin and other cryptocurrencies — delivered to the digital wallet of choice.
Cash
USD, AUD, GPB, CAD
BTC, DASH
Buy bitcoin and DASH through this peer-to-peer cash only cryptocurrency exchange based in the US.

Compare up to 4 providers

Name Product Payment Methods Supported Fiat Currencies Cryptocurrencies Minimum Deposit
Credit card, Debit card, POLi, BPAY, Bank transfer
AUD, GBP, USD, JPY, EUR, CAD, CHF
BTC, ETH, XRP
None
Losses can exceed deposits.
A trading platform which offers cryptocurrency CFDs where traders speculate on the price movement of cryptocurrencies such as BTC, ETH and XRP.
Credit card, Debit card, Neteller, PayPal, Skrill, WebMoney, Yandex Money
USD
BTC, BCH, DASH, ETC, ETH, LTC, XRP
USD$200-$500
Losses can exceed deposits.
Copy the trades of leading cryptocurrency investors on this unique social investment platform.
Credit card, Debit card, Electronic Funds Transfer, Neteller, SOFORT, Skrill, iDeal, WeChatPay, Giropay, China Union Pay & more
USD
BTC, ETH, XRP
0.25 BTC, 1000 XRP, or 1 ETH
Losses can exceed deposits.
This online trading platform based in Poland, Cyprus and Australia offers several deposit methods for international users.
Credit card, Debit card, BPAY, Electronic Funds Transfer
EUR, USD, AUD, JPY, GBP
BTC, ETH, LTC, XRP
None
Losses can exceed deposits.
A trading platform offering CFDs and margin trading where users can trade the value of cryptocurrencies through a broker without storing or owning tokens.
Credit card, Debit card, BPAY, POLi, Neteller, PayPal, China UnionPay, Wire Transfer, Fasapay, Qiwi, Skrill, WebMoney
AUD, EUR, CAD, CHF, GBP, JPY, NZD, SGD, USD, HKD
BTC, BCH, ETH, LTC, DASH, XRP
USD$200
Losses can exceed deposits.
As a forex and CFD trading platform based in Australia, Pepperstone gives local and international users access to trade cryptocurrency against USD.
Cryptocurrency
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BTC, BCH, ADA, DASH, ETH, ETC, LTC, XMR, XRP, XLM, ZEC
Varies
Losses can exceed deposits.
Trade cryptocurrency derivatives with high liquidity for bitcoin spot and futures, and up to 100% leverage on margin trading.
Credit card, Debit card, Wire transfer, Credit vouchers (POLi, Neteller, SEPA, Giropay, Skrill & more)
GBP, EUR
BTC, LTC, ETH, XRP, XMR, DASH, NXT, ETC, ZEC, GNT
EUR€300
Losses can exceed deposits.
An international trading platform which offers Cryptocurrency CFDs, enabling users access to several main cryptocurrencies.

Compare up to 4 providers

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HiveEx.com is an over-the-counter (OTC) cryptocurrency platform specialising in high-volume trades.

  • Tap into HiveEx.com’s global network of high liquidity trading partners
  • Trade between $10,000 and $100 million for a fixed price
  • Access competitive rates compared to traditional exchange trading
  • Receive your coins in your wallet fast, with same day settlement options
  • As an AUSTRAC registered company, HiveEx.com is fully compliant with industry-standard AML and CTF obligations

How to pick a trading platform

Some of the main differences you’ll find include:

  • The currencies available: Bitcoin to USD is widely available, but other fiat and cryptocurrencies might not be available at all platforms.
  • Leverage available: Leverage lets you trade beyond your initial deposit and multiply your gains, suiting those who prefer higher risks and higher rewards. You can often find leverage up to 20:1 with cryptocurrency, depending on your chosen platform and currency pair.
  • Trading features: Hedging, stop loss features and other options can give you more control over your trading. Experienced traders might be able to benefit from these, while first-timers might prefer to keep it simple.
  • Minimum investment: What’s the minimum (and maximum) amount you can invest? Does it work for you?

Compare trading platforms

A word on risk

Market trading of any asset is risky and cryptocurrencies are very volatile. There is no guarantee of a return of investment. As always, you should never trade with capital that you aren’t prepared to risk losing.

How cryptocurrency trading works

Market trading might sound like something reserved for the financial elite, but the growth of cryptocurrency is accompanied by the growth of online currency exchanges and trading platforms where anyone can take part in market speculation. You just need to know how it works.

What is forex market trading?

Foreign exchange (forex) market trading is the buying and selling of currencies between traders. In its simplest form, you’re betting on the changing price difference between two different currencies.

You open an account and deposit funds into it. These funds are then used to place buy and sell orders against another currency. You make profits from selling, or closing orders, at a higher price than you bought.

Read a beginner's guide to forex trading here.

How do you make a profit?

To start trading, you deposit funds into your account. When you bet correctly, the funds in your account increase. When you bet incorrectly, the funds in your account decrease.

With leverage, you can magnify your profits and losses.

For example, say you placed a US$1,000 trade on bitcoin increasing in price, without leverage. If its price increased by 10%, compared to the US dollar, during the trade period your profits would be $100, minus any trading fees.

But if you traded with 10:1 leverage, your profits would be 10 times that, minus the trading fees.

As you can see, the sharp price movements of cryptocurrencies, combined with leverage, can quickly produce substantial returns.

However it goes both ways. If the price starts dropping, leverage might chew through your deposited funds quickly.

Cryptocurrency trading

Trading cryptocurrencies works exactly the same, but instead of selling and buying fiat currencies, such as euros or US dollars, traders buy and sell cryptocurrencies, such as bitcoin, Ethereum or Litecoin.

For example, you might bet on the changing price difference between the US dollar and bitcoin. Or you might bet on the changing values between two different cryptocurrencies, such as by trading a BTC:ETH pair.

If you think bitcoin will increase in value, you might “go long” on it. This means betting that it will increase in value relative to the US dollar.

If you think bitcoin will decrease in value, you might “short” it instead. This means betting that it will decrease in value relative to the US dollar.

You’re not actually buying the cryptocurrency. Instead, you’re just placing an order on the market.

Just like forex market trading, cryptocurrency trading works by exchanging one currency into another and back. You will usually exchange a fiat currency into a cryptocurrency and then, at a later date, back into a fiat currency, although there are traders and exchanges that allow cryptocurrency-to-cryptocurrency trading.

For example, let’s take a look at the BTC to USD chart for 2017:

BTC/USD price chart
Bitcoin to USD price chart, November 2016 – November 2017Yahoo Finance

We can see here, that as 2017 progressed, the value of bitcoin in comparison with the dollar, grew from just under $1,000/BTC on 1 January 2017 to over $10,800/BTC in the last week of November 2017.

Two types of traders

There are two types of trading available to traders interested in market trading cryptocurrencies:

Long-term trading

Bitcoin wallet icon

Long-term traders buy and hold cryptocurrencies over a long period. They may hold a cryptocurrency for weeks, months or even years. Studying price trends over a long period allows long-term traders to make informed decisions and avoid suffering from short-term dips in value.

If you believe the value of a cryptocurrency will grow steadily over a long period and don’t want the stress that comes from short-term value dips, then this method might be your best choice.

Short-term trading (or intraday trading)

Bitcoin trading icon

Short-term trading eschews the stability of long-term trading for the possibility of taking advantage of short-term price swings and involves buying and selling cryptocurrencies over the span of a day or a few hours.

If you’d rather take advantage of the characteristic volatility of cryptocurrencies by getting in and out of a trade quickly, then this method might be for you.

The advantages of trading cryptocurrencies

Trading cryptocurrencies, while similar to trading fiat currencies on forex, comes with its own set of advantages.

  • Cheap fees and fast exchanges. For each trade, the exchange platform you’re using will take a small percentage as commission for the service they’re providing. This is inevitable. Where cryptocurrency trades differ from their fiat currency equivalent is in the size of this fee. Because the fees for transferring cryptocurrencies (typically via wallet payments) are cheaper than credit card and bank transfer fees, market-trading fees are cheaper than forex-trading fees.
  • Extreme volatility. Traders make profits when the price of the currency takes large strides upwards, and cryptocurrencies often experience large price movements. While this increases the risk (large price movements happen downwards as well), you can often make a lot of profit with a relatively small bankroll.
  • Open all week.You can only trade stocks and commodities during business hours, and you can often only trade forex during weekdays. Cryptocurrencies, on the other hand, can be traded 24/7, anytime and anywhere, depending on the exchange.

Start comparing trading platforms

Things to be careful of

If you’re not careful when it comes to cryptocurrency trading, you could find yourself gambling more than you’re trading, and eventually you might lose all your money. Trading is not a game, and just as there is real money to be made, there is real money to be lost. Doing your research and keeping the following concepts in mind when trading could help you avoid the pitfalls of cryptocurrency trading.

Cryptocurrency’s volatility

The number one thing you’ll need to keep in mind when it comes to cryptocurrency trading is that the price is extremely volatile. Where certain trade techniques used in forex might take months to come to fruition, in cryptocurrency trading, it could only take hours or days. While this is beneficial when it comes to making a profit, it could also be your downfall if the price moves the other way.

In September 2017, Litecoin’s value fell more than 50% in two weeks. The recovery to its previous value took more than two months. Cryptocurrencies not only take large steps in value both up and down, but they also do so in very short spans of time.

LTC/USD price chart
Litecoin to USD price chart, August 2017 – November 2017CoinMarketCap

Compare this movement to the chart of euros to US dollars for the same time period.

EUR/USD price chart
EUR to USD price chart, August 2017 – November 2017Yahoo Finance

In August 2017, $US1 was worth EUR€0.8457. In November 2017, $US1 is worth EUR€0.8375. That’s a difference of only EUR€0.0082 per $US1.

Patterns sometimes lie

Many market-trading books and guides cover certain chart-reading techniques and patterns used by professionals to predict the market. While the market does sometimes follow patterns, this is never a guaranteed outcome, and unless you limit your exposure, you could end up losing a lot of money over a pattern that does not exist.

Limit your exposure

Limiting your exposure comes down to two specific concepts:

  • Never invest more money than you are willing to lose. You should consider any money you put into a trade as lost. If you’re uncomfortable with this notion, then you’re trading more money than you should be. Finding the point where you’re comfortable with this concept is key to helping you trade stress-free.
  • Consider setting up “take profit” and “stop loss” orders. These limits are offered by many professional trading platforms and can automatically liquidate and “cash out” your position at predefined prices.

Stay away from leverage

Leverage is money that a broker loans you. It’s wise to stay away from leverage until you’ve learned everything you can learn about making trades with your own money. While leverage can help you make greater profits with short cryptocurrency movements, it can also amplify your losses when the trade takes a wrong turn.

Always remember, leverage amplifies your winnings and your losses equally. As a beginner, the risks presented when using leverage are typically not worth the possibility of amplified profits.

Leverage example

You decide to trade $2000 dollars to BTC. Additionally, you leverage another $10,000 from your broker. Now you can buy 1.6 BTC at $7,500/BTC. Later you sell at $8,500/BTC, return the $10,000 and you are left with $3,600, a profit of $1,600 on your initial $2,000.

Unfortunately, this works the other way around as well. If the price of bitcoin had fallen to $6,500/BTC instead, you would have lost $1,600.

Always remember, leverage amplifies your winnings and your losses equally. As a beginner, the risks presented when using leverage are just not worth the possibility of amplified profits.

Know when to cash out

What market trading really comes down to is knowing when to close a trade. This is the crux of the operation. Getting into a trade is easy, knowing when to get out is hard, and that is where you should focus most of your learning. This again involves two different aspects:

  • Closing a trade in profit. It is important to take your winnings out of a trade. Cryptocurrencies can move down more quickly than they move up and you don’t want to be late cashing out of a trade. You also don’t want to be too early and miss out on extra profits. There are a lot of techniques to help you make this decision that are out of scope of this beginner’s guide.
  • Cutting your losses. Similarly, you want to be ready to cut your losses if a trade goes too wrong while also not getting out too early in case the cryptocurrency recovers. Again, there are countless guides and books to help you make this decision.

How to get started trading cryptocurrency

Some trading platforms will suit your needs much better than others. It’s worth comparing them in detail and trying demos where available to find the one you like.

Name Product Payment Methods Supported Fiat Currencies Cryptocurrencies Minimum Deposit
Credit card, Debit card, POLi, BPAY, Bank transfer
AUD, GBP, USD, JPY, EUR, CAD, CHF
BTC, ETH, XRP
None
Losses can exceed deposits.
A trading platform which offers cryptocurrency CFDs where traders speculate on the price movement of cryptocurrencies such as BTC, ETH and XRP.
Credit card, Debit card, Neteller, PayPal, Skrill, WebMoney, Yandex Money
USD
BTC, BCH, DASH, ETC, ETH, LTC, XRP
USD$200-$500
Losses can exceed deposits.
Copy the trades of leading cryptocurrency investors on this unique social investment platform.
Credit card, Debit card, Electronic Funds Transfer, Neteller, SOFORT, Skrill, iDeal, WeChatPay, Giropay, China Union Pay & more
USD
BTC, ETH, XRP
0.25 BTC, 1000 XRP, or 1 ETH
Losses can exceed deposits.
This online trading platform based in Poland, Cyprus and Australia offers several deposit methods for international users.
Credit card, Debit card, BPAY, Electronic Funds Transfer
EUR, USD, AUD, JPY, GBP
BTC, ETH, LTC, XRP
None
Losses can exceed deposits.
A trading platform offering CFDs and margin trading where users can trade the value of cryptocurrencies through a broker without storing or owning tokens.
Credit card, Debit card, BPAY, POLi, Neteller, PayPal, China UnionPay, Wire Transfer, Fasapay, Qiwi, Skrill, WebMoney
AUD, EUR, CAD, CHF, GBP, JPY, NZD, SGD, USD, HKD
BTC, BCH, ETH, LTC, DASH, XRP
USD$200
Losses can exceed deposits.
As a forex and CFD trading platform based in Australia, Pepperstone gives local and international users access to trade cryptocurrency against USD.
Cryptocurrency
-
BTC, BCH, ADA, DASH, ETH, ETC, LTC, XMR, XRP, XLM, ZEC
Varies
Losses can exceed deposits.
Trade cryptocurrency derivatives with high liquidity for bitcoin spot and futures, and up to 100% leverage on margin trading.
Credit card, Debit card, Wire transfer, Credit vouchers (POLi, Neteller, SEPA, Giropay, Skrill & more)
GBP, EUR
BTC, LTC, ETH, XRP, XMR, DASH, NXT, ETC, ZEC, GNT
EUR€300
Losses can exceed deposits.
An international trading platform which offers Cryptocurrency CFDs, enabling users access to several main cryptocurrencies.

Compare up to 4 providers

After that:

Step 1. Learn the platform

Cryptocurrency brokers usually offer their own trading platform, and each broker’s system will be slightly different from one another. You will need to put in the time to learn how the platform works, where each feature is and how to utilise it.

When you first access a broker’s trading platform, you might feel overwhelmed. This is normal. Spend some time with it and continue doing your research. You will get comfortable with it in no time.

Step 2. Is it the right time?

The old adage of “buy low, sell high” holds for cryptocurrencies just as it holds for any other sort of investment or trading. Cryptocurrency markets move up and down, and large movements up are often followed by sudden dips.

ETH/USD price chart

Ethereum to USD price chart, May 2017 – November 2017CoinMarketCap

Step 3. Get in there

The best way to learn how to trade is to actually trade. There is no secret. Once you’ve learned all the theory, you’ll need to get your feet wet. Buy some cryptocurrency, set your limits and get started.

Just remember that it’s gambling. Go in expecting to lose your money and you’ll never be disappointed.

What affects the price of a cryptocurrency?

Cryptocurrencies are volatile by nature. They are not as stable as currencies that have had centuries to develop. Bitcoin is the oldest coin on the market, and it has only been around since 2009. Nevertheless, there are a number of things that can affect cryptocurrencies:

  • Regulation. If a government makes a statement or pushes for a particular regulation that affects cryptocurrencies, you can bet that the price will react to it (sometimes positively, often negatively). When China banned ICOs, the price of Ethereum fell by 41% in 15 days (from$386.83/ETH to $228.06).
  • Media influence. Just like government regulation, exposure in the media greatly affects a cryptocurrency’s price. Whenever a public figure makes a statement regarding cryptocurrencies or a major retailer starts accepting cryptocurrency as a form of payment, you will see the market respond.
  • Changes to the technology. When a cryptocurrency’s core technology is affected (either via an update or the finding of a flaw), the cryptocurrency’s price is also affected.

In conclusion

Trading cryptocurrencies works almost exactly the same as trading fiat currencies, and it will benefit you greatly to learn the theory behind trading currencies. While profits are never guaranteed when trading, you can take steps to protect yourself from heavy losses and to improve your understanding of how markets move.

There’s more to know than can be crammed into this guide, but the only real way to learn is by doing. This generally means picking a platform, setting aside some money that you don’t mind losing and starting to learn.

Good luck!

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