How Crypto Trading Works: An Easy Guide to Understanding

FinanceFeeds Editorial Team

Everything about crypto trading, explained in basic and simple terms.

As cryptocurrencies are slowly, but surely, starting to take over the world, the market has gained immense popularity in recent years. Over the past decade, since the launch and introduction of Bitcoin in the market, its steep development and its value now surpassing that of gold, there has been an uproaring interest from consumers.

It’s all about timing. If you time it correctly, then you can have much higher returns. The aim is to ideally make a profit by either buying or selling cryptos, based on the changing value of the underlying asset. However, since cryptocurrency prices are still so volatile, many traders opt to HODL, as it sounds like a much safer and appealing option to them.

It’s a lot! So, here’s an easy guide on simply understanding what crypto trading is and how it actually works.

What is Crypto Trading?

Crypto trading is the act of speculating the fluctuation in prices and value of digital currencies. Due to their volatility, we are talking about price movements that can be potentially high highs and low lows.

How Does Crypto Trading Work?

One way of crypto trading is to use a digital wallet to buy and sell cryptocurrencies via an exchange, where their value would depend on the market rates at the time. Similarly to the stock market, once you buy a cryptocurrency, you can make a profit if you sell it at a higher price than what you paid for it.

CFDs (contracts for difference) are another popular way of crypto trading. It is a much more advanced trading strategy that is mostly used by experienced investors. If you trade cryptos as CFDs, you don’t own the underlying asset. Instead, a contract is made between the buyer and the seller to exchange the difference in value between the opening and closing of the contract.

Crypto trading is still not a simple task.  It involves a risk that not many people are used to compared to traditional markets and exchanges. It requires relevant skills and knowledge in understanding, following and analyzing the market.

Risk Warning: Cryptocurrencies are highly volatile and trading can result in the loss of your invested funds. Before investing you should be aware that cryptocurrencies may not be suitable for all investors. You should therefore carefully consider whether trading or holding digital assets is suitable for you in light of your financial condition and not invest money that you cannot afford to lose.

Read this next

Metaverse Gaming NFT

DCentral Miami brings together all of Web3, NFT, DeFi, Metaverse

The world’s biggest Web3 meeting entitled DCENTRAL Miami is set to take place November 28-29, featuring a lineup of some of the biggest and most influential names in the blockchain space.

Digital Assets

Crypto ban expands across UK banks as Starling joins ‎crackdown

UK digital bank Starling has banned ‎all customer payments related to cryptocurrencies, another blow for the crypto traders ‎who recently saw a sizable number of banks deciding not to ‎finance the wobbly asset class.‎


Markets Direct at FIA EXPO 2022: Traders know what they want from brokers

The FIA Expo 2022, one of the most prestigious events within the global derivatives trading industry, took place in Chicago on 14 & 15 November.


FIA Expo 2022: TNS addresses public cloud limitations with hybrid infrastructure

November is the month of the FIA Expo, one of the largest futures and options conferences in the world, bringing together regulators, exchanges, software vendors, and brokers in one place: the Sheraton Grand Chicago Riverwalk. 

Retail FX

Italy’s regulator blacks out Finance CapitalFX, MFCapitalFX

Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB) has shut down new websites in an ongoing clampdown against firms it accuses of illegally promoting investment products in the country.

Retail FX

Suspected leader of Honk Kong ramp-and-dump scam appears in court

A leader of a sophisticated ramp-and-dump scheme made his first court appearance in a Hong Kong court today, charged with market manipulation and various criminal offences. The case stems from an earlier joint operation of Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), and the local police. 

Institutional FX

Cboe’s James Arrante discusses growing demand for fixed income, FX algo

We caught up with James Arrante, senior director of FX & US treasuries product and business management at Cboe Global Markets, to uncover emerging trends in the FX and fixed income markets and learn more about the bourse operator’s recent initiatives.

Retail FX

Eurotrader acquires UK broker Petra Asset Management

Eurotrader Group has formally entered into the UK market with the acquisition of FCA-regulated broker, previously named Petra Asset Management Ltd. The new entity operates under the brand name Eurotrade Capital Ltd.

Inside View, Retail FX

The Game of Chess Continues – OPEC, China and the Oil Market

Over the past decade, the US has been complaining about the amount of power which the BRIC group, and specifically China, has on the global economy. BRIC stands for Brazil, Russia, India and China; these were the world’s fastest growing economies. Only in the past 10 months, the US has turned their attention toward OPEC due to the prices of fuel. Nevertheless, China seems to have a strong influence even over the price of crude oil.