How to Trade Cryptocurrency
Trading a volatile market such as cryptocurrency offers the potential for a profit if you can execute the right strategy. Please be mindful that trading can also amplify losses.
With Tradu you can trade crypto via CFDs.
Read on to learn about the different ways you can speculate on the movements in the crypto market with us and how you can get started today.
- Learn how to trade cryptocurrency
- CFDs
- Purchasing from an exchange
- Cryptocurrency CFD trading example
- Going long
- Going short
- How to get into cryptocurrency trading with Tradu
Learn how to trade cryptocurrency
There are several methods you can use to start trading cryptocurrency. Whether you want to own a piece of this emerging monetary format or simply think you can spot a trend in the highly volatile markets surrounding it, there's something for you.
CFDs
Sign up for a Tradu trading account and you can begin to speculate on the future movements of cryptocurrencies including Bitcoin and Ether.
Select the crypto you've seen something in and then decide whether to go long ('buy') if you foresee prices rising or short ('sell') if you think values will drop.
All that's left to do is set your margin – the amount that you will pay to enter the contract – and see if the market moves in the way you predicted. You stand to profit if your prediction is correct, but you could lose all your invested capital and potentially more if it goes in the opposite direction.
These leveraged products mean that you can take a position with lower upfront capital and still benefit from the full value of the trade. However, while this can magnify your potential profits, it can also lead to larger losses if the crypto value does not move in the way you predicted.
You will never own any cryptocurrency when you trade CFDs with Tradu.
Get a full rundown of how CFDs work in our handy guide.
Purchasing from an exchange
If you want to own cryptos such as Bitcoin and Ether, you can purchase amounts of these currencies from an exchange or broker.
To profit from crypto ownership, you will be reliant on the coin's value rising and being able to time a subsequent sale successfully.
Owning crypto coins and tokens also comes with extra considerations, most notably when it comes to their storage. You can opt for a more secure 'cold wallet', which is offline storage typically in the form of a hard drive. A 'hot wallet' is an online facility which gives you quick access to your crypto when you need it.
Cryptocurrency CFD trading example: How to start a trade, how much it costs
Once you've analysed the market, it's time to put your knowledge to the test.
Using the popular cryptos Bitcoin and Ether, here are how two hypothetical trades could play out.
Going long (Buy Ether/USD)
If you believe the price of Ether is set to rise against the US dollar, you will enter a buy trade.
The sell/buy price at the time of your trade is 1648/1653. You buy five contracts at 1653, meaning you will gain or lose five dollars for every $1 change in the price of Ether.
Profit: Ether rises in value against the US dollar and the sell/buy price moves to 1733/1738. You sell five units to close your trade at 1728. The price of Ether has risen 80 points in your favour.
Your profit is $400 (80 x $5).
Loss: Ether falls in value against the US dollar and the sell/buy price moves to 1573/1578. You sell five units to close your trade at 1573. The price of Ether has fallen 80 points against you.
Your loss is $400 (80 x $5).
Going short (Sell Bitcoin/USD)
Spotted something in the news that leads you to believe Bitcoin might lose value? Enter a sell trade to try to capitalise.
The sell/buy price at the time of your trade is 23870/23910. You sell two contracts at 23870, meaning you will gain or lose two dollars for every $1 change in the price of Bitcoin.
Profit: Bitcoin falls in value against the US dollar and the sell/buy price moves to 22330/22370. You buy two units to close your trade at 22370. The price of Bitcoin has fallen 1,500 points in your favour.
Your profit is $3,000 (1,500 x $2).
Loss: Bitcoin rises in value against the US dollar and the sell/buy price moves to 25330/25370. You buy two units to close your trade at 25370. The price of Bitcoin has risen 1,500 points against you.
Your loss is $3,000 (1,500 x $2).
How to get into cryptocurrency trading with Tradu
Think you've spotted a trend in the crypto markets? Whether you expect crypto values to go up or down, you could profit if you're right and lose, if you are not.
- Create an account: Signing up for a Tradu trading account is simple and you could be up and running in just a few minutes.
- Learn the system: Check out our market, trading and platform guides to get fully clued up before you make your first trade.
- Set your strategy: Pick your cryptocurrency and decide on your position – long or short.
- Execute your first trade: Lock in your position in seconds thanks to our intuitive platform.
- Monitor movements and close your position: You can analyse the markets manually or take advantage of our automated stop orders. We make it easy for you to get out when the time is right.
- Diversify your portfolio: Research other trading instruments such as listed stocks and CFDs on forex, stocks, commodities and indices. It's possible to build a fully diversified portfolio from one single account with Tradu.
Want to learn how best to trade cryptocurrency?
Check out our collection of guides that go into more detail about the different factors that can influence the price of cryptocurrency and your strategies to potentially profit.
The information in this article is for educational purposes only.