Person using a laptop with crypto coins, displaying a candlestick crypto price chart

How to trade cryptocurrency

Discover how to trade cryptocurrency like a pro. Unlock profitable strategies and navigate the market confidently with our introduction to trading BTC, ETH and more!

Key takeaways

The cryptocurrency market is subject to high volatility

Trading cryptocurrency CFDs offers profit potential from both rises and falls

You don’t need to own or buy crypto coins to benefit from crypto movement

How to trade cryptocurrency

Tap into the trading potential of the dynamic, fast-paced crypto market.

Trading cryptocurrency has come a long way since the ‘wild west’ days of unregulated activity and crippling exchange hacks.

Today, under better regulation and having had some time to mature, cryptocurrency is an attractive market for traders recognising the incredible earning potential of this highly volatile market.

Why trade crypto?

At FXTM, we cater for the short-term cryptocurrency trader. These traders are more inclined to trade the cryptocurrency market with the objective of short-term gains using derivatives such as CFDs. There are a number of reasons why speculating on crypto market movements is appealing:



Crypto is a highly volatile market. Market fluctuations are fast and frequent, offering ample opportunities for traders looking to take advantage of market movements.

As always, the potential of high rewards comes with high risk, and you’re encouraged to do your own research and implement efficient risk management strategies before trading cryptocurrency.



Trading cryptocurrency with CFDs means access to leveraged trading, or trading on margin. This allows you to control a larger position (bigger exposure) with a smaller percentage of capital.

For example, if bitcoin is trading at $25,000, then 1:100 leverage means you could open a $25,000 position for just $250!

Leverage magnifies outcomes, meaning that any potential profits are amplified, but so are any losses incurred. Effective risk management such as setting a stop loss or take profit is essential.


Go long or short

One of the greatest benefits of CFDs is the opportunity to potentially profit from market prices both increasing and decreasing. You can either go long and buy a CFD on the expectation that the price will increase or go short and sell a CFD anticipating the price to decrease.



Speculative trading on cryptocurrency can be used to hedge existing cryptocurrency holdings. For example, a long-term cryptocurrency investor may use CFD contracts to protect their portfolio from potential price declines, helping to minimise losses.


Lower capital outlay

Trading cryptocurrency coins can be costly, especially for higher-valued, more liquid coins. In contrast, CFD trading allows you to speculate on the price movement of the cryptocurrency without buying the underlying asset, with up to 1:100 leverage, and with spreads as low as zero. This means you can enter the market with a smaller initial investment.


No custody concerns

Unlike trading of cryptocurrency coins, with speculative trading on derivatives, traders don’t take ownership of crypto coins. As such, they don’t need to concern themselves with the secure transfer and custody of coins. This can be a technical process and poses risks of cyberattacks on exchanges and wallets, which have led to significant losses in the past.

Types of crypto trading

As mentioned, there are two primary forms of cryptocurrency trading popular with traders: Buying coins and speculative trading using CFD.

Buying cryptocurrency coins

Buying coins may be considered more investing than trading as the underlying objective is to accumulate coins and hold open positions for an extended period.

Long-term traders will be more concerned with the fundamentals of the cryptocurrency project and utility, looking at the potential increase in value over the long term. Price decreases are seen as an opportunity to buy more coins at a lower price.

Trading with cryptocurrency CFDs

Cryptocurrency CFDs, on the other hand, are ideal for short-term traders aiming to maximise profit in the short-term. CFDs allow for leveraged trading, meaning traders can enter the market with a low capital percentage compared to exposure.

As CFDs are based on price movements, traders are spared the technical requirements of owning and securely storing the cryptocurrency, while benefiting from a more liquid market.

Using leverage in crypto CFD trade:
Let’s look at a quick example of using leverage to trade crypto CFDs. By using the 1:100 leverage offered by FXTM, trading a 0.01 lot of bitcoin valued at $25,000, means you’d be able to open the position with only $250 capital as a deposit.

Furthermore, the estimated trading fees on such a trade are around $0.80, which includes the spread and commission costs.

How cryptocurrency CFDs work

To trade a crypto CFD, a trader agrees to buy or sell a certain amount of cryptocurrency at a specified time with a CFD trading broker, like FXTM. At the end of the contract, the trader will either make a profit or loss based on the difference between the opening and closing prices less applicable fees.

Managing risk for cryptocurrency CFD trading

While CFD trading for cryptocurrency may be highly rewarding and profitable, the opportunity to trade on margin, i.e., with leverage and exponential exposure or positions compared to capital outlay, the potential for loss is also that much greater. Effective risk management is crucial to minimise any losses.

Stop loss orders:

Set Stop loss Levels: Always use stop loss orders to limit potential losses. Determine a specific price level at which you will exit the trade if it goes against you. Stop loss levels are based on technical analysis, support and resistance levels, or other indicators.

Trailing Stop loss: Consider using a trailing stop loss, which automatically adjusts as the price moves in your favour. This can lock in profits while still protecting against significant losses.

Watch our video: What is Stop Loss?

Understand Leverage: Be aware of the leverage offered. While leverage can amplify profits, it also magnifies losses. Use leverage cautiously to reduce risk.

Margin Calls: Be prepared for margin calls where further deposits may be required. Make sure you have enough funds in your trading account to cover potential losses and avoid liquidation.

Risk per Trade: Decide the amount of capital you are willing to risk on each trade. This is typically a percentage of your total trading capital. For example, if your trading capital is $10,000 and you risk 2% per trade, your maximum risk per trade would be $200.

Take profit orders

Set Take profit Levels: Define a specific price level at which you will take profits. Take profit orders help you secure gains before the market reverses.

Partial Profits: Consider taking partial profits at predefined levels and trailing the rest with a stop order. This strategy allows you to lock in some profits while giving the remaining portion the opportunity to grow.

Watch our video: What is Take Profit?

Lot Size: Calculate the appropriate lot size based on your risk per trade and the distance to your stop loss level. Smaller lot sizes reduce the potential loss on a trade. Our profit calculator can help.

Stay Informed: Stay updated on cryptocurrency news and events that can impact the market. Be prepared for unexpected price movements and adjust your risk management accordingly.

Emotional Discipline: Follow your trading plan and risk management rules consistently, regardless of emotions. Avoid impulsive decisions based on fear or greed.


To trade cryptocurrency, you’ll need access to a trading account on FXTM. You can open an account here. Before you place your first cryptocurrency trade, you should be sure you understand all the benefits and risks and have a clear, defined strategy.

Cryptocurrency is an extremely volatile market, so it does come with some challenges. Experienced traders will find trading crypto to be easier than some beginner or new traders, as they’ve already honed their skills. That said, we aim to make trading easy for all, and if you commit to educating yourself on trading, we believe you’ll be up and trading in no time at all.

A crypto CFD is a financial derivative that allows traders to speculate on the price movements of cryptocurrencies, without actually owning the underlying digital assets. In a CFD trade, the trader enters into a contract with a broker to exchange the difference in the price of a cryptocurrency between the time the contract is opened and when it is closed.

The profit potential in crypto is limitless and the amount a crypto trader makes is going to be determined by a number of personal factors including trading experience, market knowledge, available capital and individual risk profile, amongst others.

The bottom line

Trading cryptocurrencies with CFDs presents an exciting opportunity in a market with enormous potential. It’s a market is known for its price swings, which can result in substantial gains, but also significant losses. Therefore, it's paramount to approach CFD trading in crypto with a well-thought-out strategy, diligent risk management, and a commitment to ongoing education. By doing so, traders can harness the opportunities presented by this dynamic and ever-expanding industry while safeguarding their capital in the face of market volatility.