Best Crypto Brokers
Richard Montana | August 4, 2022
A cryptocurrency broker is a firm or an individual that acts as an intermediary between the cryptocurrency markets to facilitate buying and selling of cryptocurrencies. Cryptocurrency brokers enable buying and selling for customers at prices set by the broker. For providing this service, a broker charges these users premiums for using the platform.
In the widest and most basic sense, cryptocurrency trading means that investors speculate on the price movement of cryptocurrencies. If you want to start cryptocurrency trading, you have plenty of options. You can trade cryptocurrencies using a cryptocurrency broker or a cryptocurrency exchange.
Whilst many traders and investors are already familiar with forex trading and trading stocks, more and more are giving serious consideration to including cryptocurrencies within their portfolio. If you are one of them, this handy crypto broker guide can help you discover some of the best crypto brokers in an industry which has often garnered a bad reputation from unscrupulous companies.
Top 10 Crypto Brokers
Here you will find our best crypto brokers, based on thousands of hours of extensive research, testing and analysis across hundreds of brokers. Upon conclusion of each of our broker reviews, we have assigned each broker with a rating.
Some of the most important factors that contribute towards a good broker for trading crypto online have been considered including things such as the available cryptocurrencies, other financial instruments, platforms, apps, tools, spreads, execution, liquidity, fees, education, funding options, regulation, customer service and more.
Each of our chosen crypto brokers have undergone and passed our stringent broker reviews with flying colours, based on what we consider to be amongst the most important considerations when choosing a crypto broker for trading online. These brokers are well-established within the online trading industry, providing top crypto trading conditions to traders and investors of all experience levels.
Having the best crypto brokers according to our findings listed in one place, can help you save time when looking for the best crypto broker for your own individual needs.
ADGM FRSA, ASIC, BVIFSC, CBI, FFAJ, FSCA, IIROC, JFSA
Min $100 Deposit
ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA
Min $250 Deposit
AvaTrade makes it into our best crypto brokers list. They offer traders a good selection of cryptocurrencies to trade through some of the best online trading platforms and apps, including the popular MetaTrader 4 (MT4) platform. These platforms can be used on desktop, in your web browser and as mobile trading apps so that you can trade cryptos on the go.
AvaTrade are based in the United Kingdom and an award-winning cryptocurrency trading broker. They offer the most popular cryptocurrencies including Bitcoin (BTC) and Ethereum (ETH). You can trade manually or utilise the brokers automated trading solutions if you are looking for a social trading platform.
The fees charged by AvaTrade are very competitive with leverage offered on cryptocurrencies. You can start trading cryptos online from a deposit of just $100 and have around the clock customer service in 14 languages. They are also regulated across multiple continents by various regulatory authorities.
Overall, I think AvaTrade are one of the best brokers for trading cryptocurrencies in a regulated environment with a good product range and variety of innovative features that help set them apart from the rest.
IG earn a spot in our list of the best crypto trading brokers. Founded in 1974, IG are a very well-established brokerage firm and one of the largest in the world. They offer traders a choice of more than 10 cryptocurrency markets with cryptocurrencies including Bitcoin and Ethereum. The broker also offers broad exposure in a single trade with their own Crypto 10 index whilst there is no crypto wallet needed. Commission fees are very competitive when compared to other competitors.
IG have a choice of powerful crypto trading platforms that can cater to the needs of different types of crypto traders. There is the well-known MetaTrader 4 platform along with the brokers very own IG trading platform and ProRealTime which is useful for conducting thorough market analysis.
The broker enables traders to speculate on both rising and falling cryptocurrency prices with leveraged positions in order to make the most of volatility. The vast liquidity pools integrated within the trading environment helps to ensure that there is more chance of executing your trade at your chosen price.
IG is a multi-regulated FTSE 250 company with a selection of convenient methods to safely and easily deposit and withdraw funds to and from your trading account. They also supply traders with a selection of useful trading tools and educational materials to support them with their crypto trading. Client support is on hand 24 hours day via phone, email or live chat.
I think IG are one of the best brokers in the industry, not just for trading cryptos but for trading and investing online full stop. They have some of the best trading conditions that you will find anywhere and are one of the most well-regulated brokers that offers cryptocurrencies.
Pepperstone easily makes it into our list of the best crypto brokers. Pepperstone are a very large and popular online crypto broker that provides online trading services to traders across the globe. They have a decent offering of crypto assets for trading online with top conditions including Bitcoin and Ethereum.
Pepperstone offer cryptocurrency derivative products across all of their excellent trading platforms, including the popular MetaTrader 4 (MT4) platform and the powerful cTrader platform. This allows users to access the crypto markets from anywhere in the world and whilst on the go. From the same brokerage account, you can trade other markets including forex, CFDs, stocks, indices and commodities. It is great being able to access and manage everything from one place.
Based out of Australia, Pepperstone is authorised and regulated by the Financial Conduct Authority (FCA) and the Australian Securities and Investment Commission (ASIC). Regulation can give clients extra protection that they would not have using an unregulated brokerage. I personally consider this to be top-tier regulation and therefore have no problem trusting them. In the years that I have held an account, I have yet to run into any problems. All withdrawals have been processed smoothly.
Although Pepperstone are well known for their forex trading products, crypto traders can also take advantage of their ultra-low latency execution and deep liquidity pools. This gives a favourable trading environment with access to institutional grade spreads and fast trade execution speeds. There are currently no commission fees charged for trading cryptos online with Pepperstone.
I think Pepperstone can be a solid choice of broker for anyone who is looking to also trade forex and wants access to tight spreads with some of the best execution speeds you can find.
IC Markets are considered to be one of our best crypto brokers as they are regulated and provide traders with an innovative crypto trading environment. The broker has a vast amount of liquidity from over 50+ liquidity providers which helps to ensure reliable trade execution speeds. There is a choice of intuitive and powerful trading platforms along with standalone trading tools, educational resources, various account types and flexible funding options.
IC Markets have a cryptocurrency CFD product that allows traders to go long or short without needing to actually own the underlying cryptocurrency. This means traders can speculate on the changing price of cryptocurrencies without being concerned about the security risks involved with storing them and the potential counterparty risk from the exchange. This is similar to trading futures such as gold, where you can speculate on the price movements of gold without needing to physically own gold bars that you would need to store securely. The available cryptos include Bitcoin and Ethereum as you would exepct.
I have had multiple accounts with IC Markets over the years and have watched them go from strength to strength. I appreciate how they are always at the forefront of innovative technologies and adapting to the latest market trends and demands of traders. I think they are can be a good broker if you are looking for low cost crypto trading on industry leading platforms with lots of choice in terms of trading products and services. They have excellent customer support, even on weekends, and have always been quick to process my withdrawals.
XM Group are included in our best crypto brokers list. They are one of the largest crypto trading brokers in the world with millions of clients in 196 countries. They offer traders around the globe access to trade some of the most popular cryptocurrencies (BTCUSD and ETHUSD) with tight spreads and a no re-quote policy for superior execution speeds.
Online cryptocurrency trading with XM Group is available 24 hour a day, five days a week. They have a choice of user-friendly trading platforms that are packed with tools to assist with market analysis. There are no hidden costs trading with them with transparency being the main driving factor of the services they provide.
As well as offering the best cryptocurrencies for trading online, they have over 1,000+ other trading instruments if you wish to trade other markets all from one trading account. XM Group are authorised and regulated by the Australian Securities and Investment Commission (ASIC) and the Cyprus Securities and Exchange Commission (CySEC). This strict regulation can give traders peace of mind that they are using a reputable broker who have their best interests in mind.
I have had an account with XM for many years now and they have always been at the forefront of the brokerage industry, being one of the first brokers I found who started to support cryptocurrencies. I think they can be worth consideration for anyone who is looking to trade crypto and other financial instruments in a regulated environment with minimal hassle.
Admirals is an award-winning and multi-regulated cryptocurrency broker that offers a large selection of trading instruments with very competitive trading conditions on the advanced yet user-friendly MetaTrader platforms for desktop, web and mobile devices. Cryptocurrency trading is available 24/7 with competitive leverage up to 1:5 and the ability to go long or short on some of the most popular Cryptos such as Bitcoin and Ethereum.
Eightcap is a regulated crypto broker offering over 200 CFD trading instruments on the user-friendly MetaTrader platforms including Forex, Stocks, Indices, Cryptos and Commodities. The broker has low commission fees, tight spreads, flexible leverage, rapid execution speeds, fast and free funding options, trading tools, educational materials, managed accounts and industry leading customer support.
Axi is an award winning, regulated online broker where you can trade cryptos and speculate on movements in price. They offer tight spreads, low commissions, rapid trade execution speeds and a range of different markets. Advanced platforms and trading tools ensure an excellent trading experience. You can trade cryptocurrency CFDs online with Axi, provided that it is allowed in your country of residence. With Axi, you don’t need to own any Bitcoins to trade it – they allow you to trade Bitcoin CFDs which is where you trade on the price movements, meaning you have the potential to make profit or loss from either direction.
FP Markets is an established and regulated crypto broker that offers a huge range of 10,000+ trading products across multiple global markets, including a generous choice of crypto CFDs. They have award winning platforms with transparent pricing, fast execution speeds and competitive trading costs.
Since 2001, easyMarkets has been offering traders around the world innovative features, flexible trading platforms and over 200+ global markets. They are an award winning and established broker with competitive trading conditions for all traders. With easyMarkets, you can trade cryptocurrencies with no exchange account or digital wallet necessary.
Margex is a cryptocurrency Exchange that offers a reliable way to trade Bitcoin with leverage of up to 1:100. The Exchange provides traders with an advanced trading and investment platform that provides a cutting-edge trading infrastructure worldwide. You can use the platform for trading multiple digital assets, such as Bitcoin, Ethereum, and more. The broker’s support team is available 24/7 to assist traders. The Exchange is focused on offering a fair, secure, and easy-to-use platform with the highest class of financial technologies globally.
Margex utilizes the most practical and highly scalable infrastructure type that enables traders to trade uninterrupted, even during peak market activity. Margex combines the very best of cryptocurrency and bank-grade security standards. 100% of the assets in Margex are stored in cold offline wallets. They strive to maintain transparency in every aspect, ensuring that every bit of information is available to you, from the submission of your order to its execution.
Margex provides traders with a proprietary trading platform for trading all the available digital assets. The trading platform is built with an intuitive user interface, making it suitable for all levels of traders. The trading platform combines liquidity of 12 exchanges in one place, and it is designed with bank-grade multi-layer security; as such, it does not request the personal details of users. The Margex trading platform is available as a WebTrader that runs directly on modern web browsers, such as Chrome, Safari, Firefox, and Edge, without the need to download additional software. The Margex’s trading terminal consists of the following:
- Chart and order placement module
- Order and Deals management module
- Order Book and Last Trades
Margex makes available a plethora of educational resources on its website to ensure that traders make informed trading decisions. These educational resources include trading guides, learning articles, educational courses, video tutorials, and a help center that guides traders on how to get started with the Exchanges.
Margex allows traders to create a single live trading account and start trading. Traders are allowed to deposit and withdraw funds to and from their live trading accounts using various digital currencies. The Exchange also has a demo account option; it allows traders to test out their trading strategies before implementing them on the live account options.
The Exchange’s clients’ support team is always available to respond to clients’ general, general, and account-based inquiries. The support team can be reached via the following contact channels: telephone, email, Live Chat, and social media.
Margex is an online cryptocurrency Exchange that provides traders with the right resources — various learning resources, responsive client support team, proprietary trading platform, and more — to enable them to trade the global financial markets with ease. The Exchange offers multiple digital assets for trading on its trading platform. Their clients benefit from competitive trading conditions, such as flexible leverage and more.
Crypto Trading Guide
What are Cryptocurrencies?
Cryptocurrency is a digital currency designed to be transferred between people in virtual transactions. Cryptos are built by cryptography which makes them secure and difficult to counterfeit. Most cryptocurrencies are based on blockchain technology, a distributed ledger enforced by a disparate network of computers.
Cryptocurrency is decentralised and not issued by a central authority. Thus, it is not affected by government interference which makes it even more attractive. Cryptocurrencies are not physical objects, existing only as data.
Compared to more traditional methods, it is easier to conduct transactions with cryptocurrencies as transfer are simplified with the use of public and private keys. Transfer fees are minimal in comparison to other financial transactions.
Bitcoin was the first blockchain-based cryptocurrency and still remains the benchmark and most valuable to this day. There are now thousands of different cryptocurrencies with different specifications. Amongst the other currencies include Ethereum and a number of derived currencies. Whilst some are direct clones of Bitcoin, others are hard forks. This is the term for a cryptocurrency that separates from an existing one via a change to the protocol that makes the previously invalid blocks/transactions valid (or vice-versa).
What is Mining?
Cryptocurrencies are generated by specialized computers through a resource heavy process called mining. In simple terms, mining is when these machines perform certain tasks to obtain a little bit of cryptocurrency. Some cryptocurrencies have a limit on the number of coins that can ever exist, also called a finite supply.
While Bitcoin is limited to 21 million coins, there are already around 17 million in circulation. The ability to trade partial Bitcoin allows for each of those 21 million coins to be split 100 million times, in theory. However, in practice, most of the current crypto exchanges do not support such small units in trades.
In the cryptocurrency mining process, recent cryptocurrency transactions are verified and new blocks are added to the blockchain digital ledger. Each time a cryptocurrency transaction is made, a cryptocurrency miner is responsible for ensuring the authenticity of information and updating the blockchain with the transaction.
The first cryptocurrency miner to crack the code is rewarded by being able to authorize the transaction, and in return for the service provided, crypto miners earn small amounts of cryptocurrency of their own. These fees ensure that miners still have the incentive to mine and keep the network going.
What is the Blockchain?
A blockchain is an ever-growing record of transactions made with bitcoin or any other cryptocurrency that is maintained across a series of computers which are linked via a peer to peer network.
This list of records is referred to as blocks and they are linked to each other using cryptography. Due to its design, blockchain is resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The blockchain is continuously growing and is open to anyone. When a new block is generated, it is sent to all users within the network. Each user then verifies the block and it is added to the blockchain. Each block in the blockchain contains:
- The details of the sender, receiver and amount of e-coins.
- A hash, which serves as a unique fingerprint.
- A hash of the previous block in the chain.
When you use cryptocurrencies, trading activity takes place over an online network which is known as the blockchain. A blockchain is a shared digital register of recorded data. For cryptocurrencies, this is the transaction history for every unit of the cryptocurrency, which shows how ownership has changed over time. Blockchain works by recording transactions in ‘blocks’, with new blocks added at the front of the chain.
As a result of complex algorithms, each digital currency can be easily identified, based upon a pre-set programmable code that is built within the software. Since anyone can access the same ledger at any time, this helps to give it transparency.
The blockchain, or the technology that has created these digital tokens, is one of the primary appeals of digital currencies. The reason for this is that there is no other transmission mechanism that is more secure, efficient, cost-effective, and transparent than the blockchain.
A blockchain file is always stored on multiple computers across a network – rather than in a single location – and is usually readable by everyone within the network. This makes it both transparent and very difficult to alter, with no one weak point vulnerable to hacks, or human or software error.
Blocks are linked together by cryptography – complex mathematics and computer science. Any attempt to alter data disrupts the cryptographic links between blocks, and can quickly be identified as fraudulent by computers in the network.
Whilst cryptocurrencies can be spent fairly anonymously, every crypto transaction is recorded on the public blockchain list.
Why Trade Cryptocurrencies?
Cryptocurrencies are a unique asset class with several factors that make them unique and attractive in comparison to other markets.
Cryptocurrency trading is a 24-hour market, seven days a week. Traditional markets such as forex, stocks and CFDs tend to operate 24/5. Crypto trading is open to everyone, with the average investor usually trading USD for cryptocurrency on a market and avoid the complexities and investments of mining cryptocurrencies for themselves.
Cryptocurrencies are not “fiat currencies”, they are not under the control of the government so one economy does not have a stranglehold over the crypto prices. Cryptos react to a wide range of different events that can see crypto prices soare due to uncertainties over traditional fiat currencies. Unlike other asset classes (FX, Indices, Commodities, etc.), the Cryptocurrency market is mostly dominated by retail speculators.
Cryptocurrency trading allows traders to diversify their investment portfolio, as cryptocurrency price is primarily determined by the market sentiment, demand and supply
Cryptocurrencies, especially Bitcoin, can be very volatile which means there is an opportunity for traders to catch rapid and frequent price movements.
One of the main advantages of trading cryptocurrency is that it allows traders to buy, trade and invest without the need to rely on banks or any other financial institutions. Anyone with a crypto broker account can trade cryptos.
There are 2 main reasons people trade cryptocurrencies. There are those who are looking to own the cryptocurrency and those who are speculating on an increase or decrease in the price of the cryptocurrency. Speculating on the price is primarily done via cryptocurrency CFDs whereas those who want to purchase and own cryptocurrencies can do so through a crypto exchange.
In general, the cryptocurrency market is considered illiquid because the transactions are processed across multiple exchanges, which means that trades which would be considered comparatively small can actually have a much larger impact on market prices. This is part of the reason cryptocurrency markets are so volatile.
The high volatility and trading volume in cryptocurrencies make them a popular choice for day trading. If you do decide to explore the cryptocurrency market, it is important that you have done your research and developed a money management strategy. For example, between October 2017 and October 2018, the price of bitcoin rose as high as $19,378 and fell to lows of $5,851.
When you buy a cryptocurrency, you are purchasing the asset upfront in the hope that it increases in value. But when you trade on the price of a cryptocurrency, you can buy or sell cryptos to try and take advantage of markets that are falling in price, as well as rising.
The cryptocurrency market is usually available to trade 24 hours a day, seven days a week because there is no centralised governance of the market. Cryptocurrency transactions take place directly between individuals, on cryptocurrency exchanges all over the world. However, there can be some periods of downtime when the market is adjusting to infrastructural updates.
When you buy cryptocurrencies, you’ll need to buy and sell via an exchange, which requires you to create an exchange account and store the cryptocurrency in your own digital wallet. This process can be restrictive and time consuming. It also requires some knowledge of how crypto exchanges work.
But when cryptocurrency trading with an online crypto broker, you do not need to access the exchange directly because they execute your position to the underlying market on your behalf. You won’t need to set up and manage an exchange account, so it can take less time for you to be set up and ready to trade cryptos.
Many brokers offer leveraged trading on rising and falling prices of cryptocurrencies. This enables traders to enter a position larger than they would without leverage. For example, with a trading account balance of $1,000 and 1:5 leverage, you could trade a position size of $5,000 (account balance x leverage). The leverage on crypto trading is usually less than that when trading stocks, forex and other CFDs.
It must be strongly emphasised that whilst leverage can increase potential profit, it also significantly increases the possible loss. It is imperative that you understand the significant risks involved with trading online, especially when using leverage.
How to Trade Cryptocurrencies?
Cryptocurrency trading is similar to forex trading, enabling traders to purchase cryptocurrency with US dollars. When you trade cryptocurrency CFDs (contract for differences) with a broker, you are speculating on whether your chosen market will rise or fall in value, without ever taking ownership of the digital asset.
A CFD is a contract in which you agree to exchange the difference in the price of a cryptocurrency from when you first open your position to when you close it. This enables traders to speculate on crypto prices with a standard trading account rather than purchasing cryptos via an exchange.
Crypto traders will buy (long) a cryptocurrency if they believe the price will increase in value and sell (short) a cryptocurrency if they believe the price will decrease in value. The difference between the price when the trade is opened and closed is the profit or loss of the trade.
For example, you have decided to open a long CFD position on the price of Bitcoin because you believe that the market is going to rise. If you were right about this and the value of Bitcoin increased against the US dollar, your trade would make a profit. However, if the value of Bitcoin fell against the US dollar, your position would be making a loss.
The volatility of cryptocurrencies, especially Bitcoin, has made them a popular choice among new and existing traders across the globe. In order to speculate on cryptocurrencies, you will need a crypto broker trading account. Once you have completed the quick sign-up process, you can fund your account and choose the cryptocurrencies that you wish to trade.
What is a Crypto Trading Platform?
An online crypto trading platform allows traders to access different global markets for speculating on the price movements of various trading instruments. This can include Forex, Commodities, Cryptocurrency, Stocks, Shares, Indices, Metals, Energies, Options, Bonds, ETFs and CFDs.
In the past, investors and traders would have had to go through an offline broker which meant that the markets were less accessible than they are today. As technology has improved over the years, there are now many online crypto brokerages to choose from. Anyone aspiring to be a successful trader can open a crypto trading account with an online broker and gain access to the brokers crypto trading platforms for online trading from anywhere in the world with an internet connection. Most brokers provide these platforms free of charge and for use on desktop and mobile devices.
Through a crypto trading platform you can view real time bid/ask prices of various assets and load charts that show the historical and current prices of chosen assets over multiple timeframes ranging from tick to yearly charts. You can add technical indicators to these charts to help identify potential trending and ranging market conditions. These indicators can provide trading signals and are often used as part of an overall trading strategy that involves technical, fundamental, sentiment and price action analysis. When you find a suitable trading opportunity, you can execute, manage and close your buy or sell position directly through the crypto platform.
What is a Crypto Exchange?
Cryptocurrency exchanges are online platforms in which you can exchange one kind of digital asset for another based on the market value of the given assets. It is important not to confuse cryptocurrency exchanges for cryptocurrency wallets or cryptocurrency brokers. That being said, different crypto exchanges may have different options and features. Some are made for cryptocurrency trading and others for fast cryptocurrency exchanges.
Crypto exchanges set the rate of the currencies, which can be both coins and tokens. The cryptocurrency rate usually depends on the actions of sellers and buyers, although there are other factors that can affect the price. Various crypto exchanges may have different options and functions. Some of them are made for traders, while others are made for prompt crypto-fiat exchange.
The crypto exchange will usually charge a fee per trade, accumulating revenue as more users trade more money. The exchange may charge projects a listing fee to trade the project’s coin or token on its platform. Crypto exchanges can yield a profit while providing liquidity to users.
Cryptocurrency exchanges (especially centralized exchanges) require new users to complete a registration process before they can begin trading. The levels of verification may vary – in some cases, confirming an email address will be enough, while others require applicants to upload a photo of their passport. These KYC (“know your customer”) checks are in order to ensure that crypto businesses comply with anti-money laundering measures.
Types of Crypto Exchanges
Exchanges are mainly of two types, classified on the basis of their nature. There exist centralized and decentralized exchanges, both differing in the hierarchies of operation and governance.
In a centralized crypto exchange, most of the control over your account remains in the hands of the third party which runs the exchange. On the other hand, with a decentralized exchange, all the control of the account remains with you. This is another prominent reason why decentralized cryptocurrency exchanges are becoming more popular.
The crucial difference between centralized and decentralized exchanges is whether or not a middle man is present. Decentralized exchanges are less widespread and less popular as compared with centralized exchanges.
How to Exchange Cryptocurrency
In order to exchange cryptocurrency, you will need to choose a cryptocurrency exchange and create an account with them. You will then be able to make deposits and withdrawals to and from your account in order to buy and sell cryptos according to their current market price.
Types of Cryptocurrency
Known collectively as altcoins, there is estimated to be over 1,000 different types of cryptocurrencies in circulation, including the most popular of the cryptocurrency trading market, Bitcoin.
Bitcoin currently represents a large percentage of the market whilst Ethereum is one of the next most traded cryptos in the market. Bitcoin and Ethereum combined make up the overall bulk of the market.
The less active or newer cryptocurrencies tend to have limited trading opportunities, which could mean fewer interested buyers when it’s time to sell. Therefore, many beginner traders who are not looking to be overwhelmed with too many options may wish to consider focusing their initial trading on some of the leading types of cryptocurrencies to help ensure an active trading market.
What is Bitcoin?
Bitcoin is a popular and highly volatile cryptocurrency (digital currency) that was invented in 2008 by an unknown person using the alias Satoshi Nakamoto and started in 2009 when its implementation was released as open-source software. Transactions are made with no middle men as Bitcoin is operated by a decentralized authority, unlike government-issued currencies.
There are no physical bitcoins in circulation, just balances that are kept on a public ledger that everyone has transparent access to, known as the blockchain ledger. Although each bitcoin transaction is recorded in the blockchain, only the wallet IDs are revealed and not the names of buyers and sellers. This makes bitcoin a popular choice for anonymous transactions.
Bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. The wallet acts as a type of virtual bank account which allows users to send or receive bitcoins, pay for goods or save their bitcoins. Many marketplaces called “crytpo exchanges” allow people to buy or sell bitcoins using different currencies.
Bitcoins can be traded online between individuals and businesses via digital currency wallets, email or most commonly, through the blockchain networks. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.
Bitcoins are created through “mining” which uses specialized computers to solve complex math puzzles which allows them to chain together blocks of transactions, which is where Bitcoin’s famous “blockchain” comes from. The role of miners is to secure the network and to process every Bitcoin transaction. For this service, miners are rewarded with newly-created Bitcoins and transaction fees.
How does Bitcoin Trading work?
Bitcoin trading is when you speculate on movements in the price of bitcoin without actually owning them. This differs from the more traditional method of buying and selling bitcoins via a cryptocurrency exchange. Instead, traders can take advantage of bitcoins volatility by buying or selling bitcoins in order to try and make a profit from the price movements.
If you thought the price of bitcoin was going to rise, you may consider taking a buy (long) position. If on the other hand, you thought that the price of bitcoin may decrease in value, you may think about taking a sell (short) position. The difference in the price of bitcoin from when you enter and exit the trade, is your realised profit or loss excluding any broker fees.
For example, if you purchased bitcoin and the price increased, you would make a profit on the difference in price minus any fees. However, if the price of bitcoin fell, you would make a loss and still incur fees on top. This type of price speculation is known as contract for difference (CFD) trading.
What moves Bitcoin Prices?
In order to try and speculate on the direction of bitcoin prices, it is important to be aware of the various factors that can move them. Below are a few of the most important things to consider if you are looking to buy or sell bitcoins:
- Bitcoin supply: There is a 21 million cap on the existing bitcoin supply which could be exhausted by the year 2140. Although this may seem like a long time away, the fact that there is a limited supply means that the price of bitcoin could potentially see an increase if the demand rises significantly in the coming years
- Negative press: Bitcoin sometime makes the news for the wrong reasons. Due to its anonymity, there have been cases of hacking and stolen bitcoins. Any negative news which concerns bitcoin can have a negative effect on the market price of the cryptocurrency.
- Integration: Due to the infancy and complex nature of bitcoin, it is not integrated everywhere. If it becomes more integrated over the years, the demand for bitcoins may rise which can have a positive effect on its price.
- Key events: There are specific events that can also impact the price of bitcoins. This includes any regulation changes, breaches of security and economic bitcoin announcements. If there was a way to speed up the mining of bitcoins, this could also push the prices up.
Why Trade Bitcoin?
Whilst one of the main reasons to trade bitcoin online can be the convenience of speculating on price without actually having to physical own the coins, there are also some other benefits to trading bitcoins which includes the following:
- Volatility: The volatility of bitcoin means that there can be rapid price fluctuations which present ample trading opportunities on a daily basis. However, it is worth considering that this volatility can also lead to greater risk of loss due to its unpredictable nature. That is why it is important to have done your research and developed a risk management strategy.
- Trading hours: The cryptocurrency market is usually available to trade 24 hours a day, seven days a week due to the fact that there is no centralised governance of the market.
- Trade long or short: When you trade bitcoin CFDs, you are able to go long (buy) or short (sell) in order to try and take advantage of markets that are falling in price, as well as rising.
- Leverage: Bitcoin CFDs are leveraged products which enable trades to take a larger position size than their account would have been able to without leverage. For example, if you had an account balance of $1,000 and 1:3 leverage, you could take a $3,000 position size. Whilst this may sound attractive, leverage is a double edge sword which also significantly increases risks and potential loss. Thus, it is imperative to have a clear understanding of what leverage is before trading bitcoins online.
Is Bitcoin Trading right for me?
Bitcoin trading has become a popular choice for active investors who would like to trade one of the most popular cryptocurrencies. It can be a way to diversify from more traditional markets such as stocks and commodities. Bitcoin trading can be suitable for scalping, day trading and swing trading.
However, it is important to understand the significant risks involved with trading bitcoin online, especially when using leveraged positions. Most experts would suggest trading on a demo account with virtual funds to begin with.
This can be a useful way to familiarise yourself with how to trade bitcoin and using trading platforms whilst allowing you to practice your trading strategies until you feel confident and produce consistent results. Most bitcoin brokers provide unlimited demo accounts free of charge.
How to Trade Cryptocurrency?
Now that you have had a brief overview of what crypto trading platforms are and what to look for, you may be considering opening a trading account with an online crypto broker to gain access to their crypto platforms. This can be a quick and easy process that requires completing an online registration form. Simply choose a crypto broker, follow the account opening process and you will be able to start trading cryptos online through one of their crypto trading platforms.
1. Decide if cryptocurrency trading is for you
Trading cryptocurrency online carries an element of risk and can take more time than other forms of investing. You will need to research cryptocurrency, manage your cryptocurrency trades, follow market news and decide how to react to them. It is important to understand the risks and dedication that comes with trading cryptocurrency online.
2. Educate yourself
Before trading cryptocurrency, it is imperative to learn as much as possible about investing in cryptocurrency and how it works. Any mistake could prove to be costly. There is an abundance of free educational materials provided by many cryptocurrency brokers that can help you to improve your trading skills and knowledge.
Most cryptocurrency brokerages will also provide a free demo trading account so that you can practice trading cryptocurrency online with virtual funds in order to familiarise yourself with the trading platforms and practice various cryptocurrency strategies until you feel confident enough to open a real trading account.
3. Choose a cryptocurrency broker
In order to trade cryptocurrency online, you will need a cryptocurrency broker account and crypto trading platform to execute your trades. When choosing a broker, there are a few important things to consider such as regulation, commission fees, platforms, tools, education, funding options and customer support.
4. Research cryptocurrencies
If you have made it this far then you may be ready to start trading cryptocurrency online! The next step is to research the different cryptocurrencies to discover which cryptos you have an interest in trading. Perhaps there is a particular digital coin you already have an interest in and some knowledge about. Many brokers will allow you to filter cryptocurrencies according to various criteria in order to narrow down your search if need be.
5. Have a cryptocurrency trading plan
Some of the most important factors that can help determine cryptocurrency trading performance can be the trading plan and discipline. It is important to have a solid trading plan personalised to your own needs that includes the money management and trading strategy that you will use. Most experts and professional traders would try to not let negative emotions such as fear, anger and greed affect their trading strategy.
6. Buy and sell cryptocurrencies
Once you know what cryptocurrencies you want to trade online, you can analyse them to help decide if and when you will place your trades. After placing a cryptocurrency trade, you will need to keep track of how it performs and manage it according to your crypto trading plan.
Choosing a Crypto Broker
With so many crypto brokers to choose from, it can seem overwhelming at first. That is why we will take a look at some of the most important factors to consider when choosing a crypto broker to help you understand more about what to look for when choosing the best broker for your needs.
Due to the fact that cryptos can be traded 24/7, a good crypto broker will have their trading platform and cryptos available all of the time. Even though it is a 24/7 market, some brokers will still shut down on weekends.
Most crypto brokers will offer the most popular cryptocurrencies: Bitcoin (BTC) and Ethereum (ETH),. If you would like to trade other cryptos, check that they are available through the brokers trading platform. Also consider what other trading instruments they offer if you are planning on trading other markets now or in the future. You will find there are brokers who offer a combination of financial instruments.
Nearly all crypto brokers offer leveraged trading via their crypto platforms. Leverage basically means that you can open a position larger than you could without it. If for example you had leverage of 1:50 and a trading account balance of $1,000, you could effectively open a position size of $50,000 (1,000 x 50 = 50,000). Although leverage can increase profit potential, it also increases trading risk and thus, can lead to large losses.
Cryptocurrency leverage is usually lower than that compared to forex and CFDs. This can be a good and a bad thing. The good is that you must trade within your means whereas the bad is your position sizes are limited. Check that the crypto broker offers suitable leverage to you on their crypto offerings and make sure that you have a clear understanding of what leverage is and the risks involved with trading leveraged products.
As cryptocurrencies are a relatively new asset, you may want to only start trading with a small amount to test the waters. Therefore, check the minimum deposit requirement from the broker and consider starting on a demo account to begin with. If you want to learn more whilst you pratice, you could consider one of our best brokers for beginners.
If you are well versed on a particular trading platform and wish to keep using it, check that it is offered by the broker. MetaTrader 4 (MT4) is the most popular and widely used trading platform which most traders find user friendly. One of the other main advantages of mt4 is that most online trading brokers offer it. Thus, it could make any potential transition to another broker in the future easier. You will find that there are lots of MetaTrader brokers which is one of the most user-friendly platforms that gives convenient market access for manual and automated trading strategies.
All crypto trading platforms come with a range of free built in trading tools to assist with your online crypto trading, helping to improve overall efficiency and performance. These can include technical indicators for analysing charts such as a moving average, MACD, Bollinger Bands, RSI, CCI and many more. Some platforms offer fundamental analysis tools such as built in economic calendars to efficiently keep track of the latest market news releases. They may also have trading calculators to help with planning your trades. The more advanced platforms will have depth of market (DOM) with level 2 pricing and sentiment tools that show how many traders are buying/selling a particular instrument.
If you require a specific set of trading tools or would like access to as many as possible, you should check what crypto trading platforms the broker offers along with the trading tools included. Some trading tools are stand alone and thus will not be incorporated into the crypto platforms but can still be very useful.
When choosing the best crypto brokers, it is worth considering the liquidity providers (LP’s) that the brokerage implements. A liquidity provider is a company or an individual that quotes both a buy and a sell price in a financial instrument or commodity held in inventory.
Each liquidity provider streams through a direct feed of executable buy and sell prices to the broker. The broker will then usually select the best buy price and the best sell price, which result in the best available spread.
Thus, it can be important that the broker has a variety of top-class liquidity providers to ensure that they can offer some of the best possible prices across a range of different assets during various market conditions. Liquidity providers can be global banks, financial institutions and other market makers.
Liquidity Providers include First Prime Broker “B2Broker” who are offering Forex, CFD and Cryptocurrency liquidity via multiple ways of connection, focusing mainly on the Crypto liquidity. They offer aggregated liquidity on cryptocurrencies, using aggregator MarksMan. B2Broker serve as a major provider for Forex Brokers, Crypto Exchanges, some banks and other Prime Brokers.
In addition to potential fees for gaining access to the brokers crypto trading platforms, you should consider other online trading costs. Most online brokerages will charge a commission for placing trades in addition to the spread and overnight swap fee. These costs can vary significantly from broker to broker so it is important to consider the overall costs you will incur and the affect that will have on your money management.
The spread is the difference between the buy and sell (bid/ask) price which can vary depending on the volume of liquidity and quality of liquidity providers that an online crypto broker has. Some crypto brokers offer fixed and variable spread accounts, some will offer commission free accounts but instead mark up the spread to make up for this. In general, the more liquidity that the broker has, the tighter the spreads can be. It is important to account for the spread when planning your trading strategy, especially if you are planning on using scalping strategy.
If you hold a position with your crypto broker overnight then you will probably need to pay a swap fee. This is an interest fee for the procedure of moving open positions from one day to another, also known as the rollover. This is another cost to factor in to your money management planning. Some brokers offer swap free Islamic trading accounts that conform with Sharia law which allows Muslims to engage in online trading through their crypto platforms.
Along with crypto trading platform, spread, commission and swap fees, most online brokers will charge additional fees that should be checked and clearly understood. Other fees that are worth considering include withdrawal and inactivity fees.
Make sure that the crypto broker provides prompt support, ideally 24/7 as cryptos are available to trade around the clock, seven days a week. Ensure they offer a method of contacting support that you prefer. Some traders like to speak directly to support over the phone whereas others find online chat more convenient. The location of the broker should also be considered due to time differences although most established brokers will have multilingual support teams located around the globe. If you have an issue with your crypto trading platform that you need help with, it is important that the broker has a prompt and efficient customer service team. Online chat is often the quickest way to speak with someone. The more hours the crypto brokerage support team is available, the better.
Some brokers also provide traders with educational resources such as videos and trading guides to help them improve their trading knowledge and skills. They may include detailed tutorials on how to use trading platforms which could be helpful for those who are new to online trading and need help to familiarise themselves with the different crypto platforms available to them.
You will need to make sure that the crypto trading platform will run on your computer, VPS or mobile device by checking the specification requirements. Each crypto broker trading platform will have a minimum deposit requirement which is worth considering.
Each crypto broker will offer different options for making deposits and withdrawals to and from the trading platform. Most brokers accept bank wire transfers and credit/debit cards but some traders prefer online payment processors such as Skrill, PayPal, Neteller, etc. Ensure that the crypto platform supports your preferred crypto account funding method.
When choosing a broker for crypto trading, you should check that they are regulated by a relevant government authority. Regulated crypto brokers can provide more protection to traders than an unregulated broker can. One of the key things to consider is the reputation of the broker. This can include finding out how long the they have been around, have they had security breaches in the past, what do other users have to say about them, etc.
Cryptocurrency trading is a popular choice for active investors who would like to trade a market that is open 24 hours a day. The liquidity of the cryptocurrency market also means that there is ample opportunity to look for trades. It can be suitable for scalping, day trading and swing trading.
However, it is important to understand the significant risks involved with trading cryptocurrency online, especially when using leveraged positions. Most experts would suggest trading on a demo account with virtual funds to begin with.
This can be a useful way to familiarise yourself with how to trade cryptocurrency and use the trading platforms whilst allowing you to practice your trading strategies until you feel confident and produce consistent results. Most cryptocurrency brokers provide unlimited demo accounts free of charge.
Take your time to research brokers and do your own due diligence, the above information is only for educational purposes and not advice. Please feel free to use our broker comparison tool if you need some further inspiration before you get started.