What Is Cryptocurrency Trading?
Cryptocurrency trading involves speculating on price movements via CFD trading accounts or buying/selling coins directly through exchanges.
Trading Cryptocurrencies via CFDs
CFDs (Contract for Differences) are derivatives that let you speculate on crypto price fluctuations without owning the assets. You can:
- Go long (buy) if you anticipate a price rise
- Go short (sell) if you expect a decline
As leveraged products, CFDs require only a small margin deposit to gain full market exposure. Profits/losses are calculated based on the full position size, amplifying both gains and risks.
Buying/Selling Cryptocurrencies on Exchanges
Purchasing crypto directly means acquiring the actual coins. This requires:
- Creating an exchange account
- Paying the asset’s full value upfront
- Storing coins in a personal crypto wallet until sold
Exchange trading has a steeper learning curve due to technical complexities, wallet management, and potential fees/limitations on deposits.
How Do Cryptocurrency Markets Operate?
Cryptocurrencies are decentralized, meaning no central authority (like governments) issues or backs them. Instead, they run on peer-to-peer computer networks, though trading occurs via exchanges and wallets.
Unlike traditional currencies, cryptos exist as digital records on blockchains. Transactions involve:
- Sending coins to a recipient’s digital wallet
- Mining validation to confirm transactions and add them to the blockchain
- New tokens often created during mining
What Is Blockchain?
A blockchain is a secure digital ledger recording all transactions across a network. Key features:
| Feature | Description |
|---|---|
| Decentralization | Stored across multiple computers, eliminating single-point vulnerabilities |
| Transparency | Publicly verifiable yet tamper-proof |
| Cryptography | Blocks linked via complex algorithms;篡改会破坏加密链接并触发欺诈警报 |
What Is Cryptocurrency Mining?
Mining involves:
- Verifying Transactions – Checking sender funds against blockchain history
- Creating New Blocks – Compiling valid transactions into blocks and solving cryptographic puzzles to add to the chain
Miners earn rewards (new coins) for maintaining network integrity.
Key Drivers of Cryptocurrency Prices
Cryptocurrency markets fluctuate based on:
- Supply: Total coins in circulation + issuance/burn rates
- Market Cap: Perceived value and growth potential
- Media Coverage: Public sentiment influenced by news
- Adoption: Integration with payment systems/e-commerce
- Regulatory Events: Policy changes, security breaches, or economic shifts
👉 Discover how market trends impact crypto valuations
How to Trade Cryptocurrencies?
With IG, trade cryptos via CFD accounts—derivatives allowing speculation on price movements without owning the assets.
Key Terms Explained
| Term | Definition |
|---|---|
| Spread | Difference between buy/sell prices |
| Lot Size | Standardized trade unit (often 1 coin for volatile assets) |
| Leverage | Amplified exposure with margin deposits (e.g., 10% margin for full position) |
| Pip | Smallest price movement unit (e.g., $190 → $191 = 1 pip) |
Margin Example: Open a $5,000 Bitcoin position with just $500 (10% margin).
FAQ: Cryptocurrency Trading
1. Is cryptocurrency trading risky?
Yes, due to high volatility and leverage effects. Risk management strategies (e.g., stop-loss orders) are essential.
2. Can I trade cryptocurrencies 24/7?
Most crypto markets operate 24/7, unlike traditional stock exchanges.
3. What’s the difference between CFD and exchange trading?
CFDs offer leverage and short-selling but no coin ownership. Exchanges require full payment and wallet storage.
4. How do I start trading cryptocurrencies?
- Choose a platform (CFD broker or exchange)
- Learn technical/risk management basics
- Start with small positions
👉 Explore beginner-friendly crypto trading tools
5. What affects crypto prices most?
Adoption rates, regulatory news, and technological upgrades (e.g., Ethereum’s transitions).
6. Are cryptocurrencies legal?
Legality varies by country—always check local regulations before trading.