How To Trade Cryptocurrency - The Beginners Guide

Spot, CFD, and Futures Trading Explained

When you trade cryptocurrency, the first big decision is whether you want to own the coins or speculate on their price trends. You can buy digital assets through spot trading where you actually own the underlying cryptocurrency, or use CFDs with leverage, or futures markets where you bet on price trends. Each method has a different level of complexity, cost, and risk, so the best choice depends on your goals and experience.

What’s the best for crypto day trading?

For most active day traders, crypto futures are best because you get deep liquidity, low taker fees, easy long or short, and adjustable leverage. CFDs are great if you prefer regulated platforms, cash settled, and direct shorting without wallets, though leverage and hours depend on your region. Spot trading is simplest and fine for beginner traders, but without leverage or built-in shorting it’s less efficient for intraday setups.

How to Trade Cryptocurrency Step by Step

Learning how to trade cryptocurrency requires an understanding of platforms and markets, how to trade, and risk management involving position sizing, margin, and leverage. Whether you trade with a crypto broker, exchange, or prop firm, these requirements are all the same, you must plan your trade, control your exposure, and execute with discipline. The key differences between the methods really comes down to how much control you have over the assets, how trades are settled, and how your account is structured.

Choosing How to Trade – Broker, Exchange, or Prop Firm?

Where you choose to trade cryptocurrency shapes how you approach the market. A broker lets you speculate on price without owning coins, an exchange gives you full asset control, and a prop firm provides company-funded capital if you can trade within set limits. Each method suits a different style and risk profile, and we use examples from our reviewed providers to help you see how they compare in practice.

Crypto Brokers (CFDs)

CFD brokers suit traders who want flexibility, low fees, fast execution, and the ability to go long or short without needing a crypto wallet. Top crypto brokers like Eightcap, BlackBull Markets, and Pepperstone all fall into this group.

Eightcap is known as the best crypto broker because it has the largest range of CFDs on top of MT4, MT5, and TradingView, while BlackBull focuses on ECN execution and ideal for technical traders, and Pepperstone is the go to for anyone wanting to gain exposure in traditional markets and cryptocurrency. With any CFD broker, you’re trading market trends and price movements rather than the coins themselves, and trades are settled in cash rather than crypto.

Cryptocurrency Exchanges (Spot and Futures)

If you want to actually own the digital assets and hold them in a wallet, you’ll use a crypto exchange. The most popular virtual currency exchanges like Binance, Bybit, Coinbase, and Robinhood give you direct access to spot markets where you buy and sell real coins. Binance and Bybit are better suited to active traders who trade futures markets and margin products, while Coinbase and Robinhood keep things simple and more beginner friendly.

Cryptocurrency exchanges are ideal if you prefer holding coins, moving assets to private wallets, or combining trading with long term investing, though you’ll handle your own storage and transfers.

Prop Firms (Funded Accounts)

Prop trading firms give you access to company capital once you pass an evaluation process, aka prop challenge. You trade under set drawdown and daily loss limits and if successful and secure a funded account, you get a profit share of anything you generate.

Top prop firms such as Blueberry Funded and BrightFunded both include crypto CFD trading, and it suits anyone who is confident in their trading experience, but want to scale up without risking personal capital.

Buy and Sell Basics – Setting Up Your First Trade

Once you’ve chosen where to trade, the next step is understanding how to actually buy or sell crypto. Every trade starts with a view on where you think the market is going and how much you’re willing to risk if you’re wrong.

1. Choose your virtual currency pair. Stick with major pairs like BTC/USD or ETH/USD when you start. They have higher liquidity and tighter spreads, which makes entries and exits cleaner.
2. Decide on your direction. You buy (go long) if you think the price will rise, or sell (go short) if you expect it to fall.
3. Select your order type. Market orders execute instantly at the current price, while limit orders wait for your chosen level. Most traders use both depending on volatility.
4. Set your stop loss and take profit. These levels define your exit points before you open the position. Stops keep your losses small; take profits help lock in gains automatically.
5. Confirm your size and leverage. Keep early trades small. The goal isn’t to make big returns yet, it’s to build consistency and learn how your platform handles execution.

If you’re trading on an exchange like Binance or Coinbase, you’ll see your trades fill directly in your wallet balance. With brokers like Eightcap or BlackBull Markets, trades settle in cash on your account, not as real coins. On a prop firm account, you’ll trade live markets using company funds, but the same order types apply, plan, execute, and manage your exits the same way.

Managing Orders, Leverage, and Margin

Once your trade is open, controlling risk becomes your main job. Crypto’s volatility means prices can swing several percent in seconds, so you need clear limits before the market tests you.

• Leverage lets you control a larger position with less capital, but it also magnifies losses. Regulated brokers often cap crypto leverage between 1:2 and 1:5, while prop firms and offshore accounts may have higher caps due to the lack of any regulatory oversight authority. It’s always incredibly important to use leverage carefully, especially when trading more niche altcoins that move quickly.
• Margin is the amount of your balance set aside to keep a position open, and if your equity drops too far, you’ll face a margin call or automatic liquidation. Keep your margin level well above the minimum to avoid forced closures.
• Order adjustments mean that if the value of a crypto moves in your favor, you can move your stop loss to breakeven or take partial profits to reduce risk. Avoid widening stops when a trade goes wrong, it’s better to exit and reassess than to hold a losing position.

Do you need a crypto wallet to trade digital assets?

You only need a wallet if you’re trading real coins, and if you trade through a CFD broker or a prop firm, your trades are settled in fiat or stablecoins, so there’s no blockchain transaction or wallet required. This setup avoids transfer delays and gas fees, which is why CFD trading is often more efficient for active traders.

But, if you’re buying coins directly on an exchange, you’ll need a wallet to store them securely. Exchanges provide built-in custodial wallets, but for long term holdings it’s safer to use a private wallet.

Wallets come in two main types:

• Hot wallets: Connected to the internet, faster to access but less secure.
• Cold wallets: Hardware or offline devices, safer for storage but slower for active trading.

In short, use an exchange wallet for convenience, a cold wallet for security, and you can skip wallets entirely if you trade through a broker or prop firm. What matters most is matching your storage method to your trading style – active traders need speed, investors need safety.

Cryptocurrency Trading Strategies

There are many ways to trade cryptocurrency, and no single strategy fits everyone. The right approach depends on your time, risk tolerance, and how actively you want to trade.

The most common methods include day trading and scalping, where you target short-term moves on liquid pairs; swing trading and long-term positioning, where you hold trades for days or weeks; and automated or copy trading, which uses systems or shared strategies to remove emotion from execution.

No matter which approach you use, risk management is the part that decides whether you stay consistent. The trading strategies below cover some of the most practical starting points, though there are many others, from range trading and mean reversion to algorithmic hedging, that you’ll discover as your experience grows.

Day Trading and Scalping High Liquidity Pairs

Day trading and scalping work best on pairs with tight spreads and deep books, like BTC/USD and ETH/USD. You’re looking for clean intraday moves, quick execution, and predictable fills. Keep it simple: define a session, pick one or two setups you recognise, and cap your risk per trade.

Use limit orders where possible, place your stop first, and avoid overtrading after a win or a loss. If you trade CFDs on MT5 or TradingView, set alerts for key levels so you’re reacting to price, not chasing it. On exchanges, watch the order book and funding to avoid paying for noise.

Swing Trading and Long Term Positioning

Swing trading suits you if you prefer fewer, higher quality trades. You’re holding for days or weeks, so structure entries around clear levels, trend pullbacks, and daily closes, not five minute candles. Plan the trade on higher timeframes, then refine the entry on a lower one.

For long term positions, scale in with small increments and decide in advance what invalidates the idea. If you hold real coins, think about storage and whether you want to keep part of the position off exchange. If you hold CFDs or futures, account for overnight swaps or funding in your targets.

Automated and Copy Trading Tools

Many traders use automation to help execute strategies consistently with less manual labour, using hard code or use no code tools to run entries, exits, and position sizing the same way every time.

Copy trading can also shorten the learning curve, but treat it like outsourcing execution, not outsourcing risk. Check a strategy’s drawdowns, average hold time, and how it handles volatile sessions.

Whether you automate on MT5, cTrader, or TradingView, set hard daily loss limits and keep manual override ready if market conditions change.

Risk Management for Crypto Traders

Risk management is your edge when volatility spikes, and before you start trading decide your max risk per trade (usually 1-2% of your balance), and size positions from the stop distance, not from how confident you feel. Place stops where the trade idea is wrong, not where the loss feels comfortable, and avoid adding to losers and avoid doubling leverage to win back a hit.

Use a daily stop, track your metrics weekly, and reduce size after drawdowns until you’re back in rhythm. If you trade futures, watch margin and funding; if you trade spot, don’t let position size creep up just because there’s no leverage showing on screen. Consistency in risk makes the strategy you choose actually matter.