With all the hype around cryptocurrencies right now, it’s no surprise you want to get involved. Who wouldn’t?
The problem is cryptocurrencies can be a little tricky to get your head around if you’re not clued up on the technology, digital wallets and reliable exchanges it’s difficult to know where to trade cryptocurrency online.
With a complex mix of technology and finance understanding required, getting into crypto trading can be an intimidating process.
The first decision you have to make is choosing the best place to trade cryptocurrency online.
There are some great trading platforms to choose from, too, but there are also scams and brokers with questionable reputations to avoid.
So, in this article, we’re going to run you through everything you need to know about choosing the best place to trade cryptocurrencies online.
What Is Cryptocurrency Trading?
Cryptocurrency trading is precisely what it sounds like. It’s the crypto equivalent of Forex trading: you exchange different digital currencies with the aim of making profit on your trades.
A basic tactic is to trade from one cryptocurrency into another and trade back to the original when there’s a profit to be made.
Alternatively, you can trade from one currency to the next, buying altcoins with potential when their price is low and then watching your profit rise over time. There are plenty of other strategies you can employ, most of which will be very familiar to Forex traders.
Unlike Forex trading, the crypto market isn’t part of the regular stock market.
To trade digital currencies, you need to use a dedicated cryptocurrency trading platform – and we’ll be looking at some of the best options later in this article.
First, let’s look at some of the different ways you can trade cryptocurrencies.
Different Types Of Cryptocurrency Trading
There are various different ways you can trade cryptocurrencies and in this section of the article we’re going to run through some of the most popular choices.
First up is the most obvious one: buying cryptocurrency with cash and then getting yourself on the trading circuit.
1. Buying Cryptocurrencies
If you’ve got the capital to invest this way, buying cryptocurrency outright is often the best approach. Doing this gives you full ownership and control over the currency you buy, meaning you can transfer, sell and exchange the currency as you please.
The first downside is you have to take responsibility for safeguarding your Private Keys. These things stop people accessing your cryptocurrency, which includes you if you end up losing, forgetting or somehow losing access to them.
Your other main concern is protecting your currency from hackers, which largely comes down to the wallets you choose to store them in and the security measures in place – both your own and those of each wallet you use.
2. Trading Cryptocurrency CFDs
When you trade cryptocurrency CFDs (contracts for difference), you’re basically betting on the value changes of any given currency.
This is a form of derivative trading where you speculate on the rise or fall in value of a cryptocurrency like Bitcoin. The obvious benefit is you can profit as values rise and fall but this also comes with added risk.
Another key benefit is that brokers offer much higher leverages than you’ll encounter with traditional trading, allowing you to pay a deposit on your total position. For example, a leverage of 1:100 means you only pay €1,000 upfront on a €100,000 position.
3. Margin Trading Cryptocurrencies
Margin trading is essentially borrowing from brokers to purchase cryptocurrency. The difference between this and trading CFDs is you’re actually buying the currency rather than simply betting on value changes.
The leverages for margin trading are also much smaller than CFD trading.
Leverages of 2:1 are particularly common, for example, where you can put down €1,000 and get €2,000 worth of a cryptocurrency.
Once again, there are additional risks to this approach and the biggest danger is you get yourself into debt. Smaller leverages mean less risk but you only make money if the value of your currency rises, minus whatever you’ve borrowed, the interest on top of your loan and any additional trading fees.
You also still need to think about all the usual security concerns that come with owning cryptocurrency.
4. Crypto-crypto Trading
As the name suggests, crypto-crypto trading is simply the exchange of different cryptocurrencies, much like Forex trading.
The aim is to buy one currency with potential to increase its value and then trade it, perhaps for another promising currency or invest the profit into something more reliable like Bitcoin (if you can even call that reliable in the world of crypto).
You can approach this in one of two ways. First, you can buy cryptocurrency outright and then start trading.
Or you can use another model like margin trading to get your hands on a larger position size – a tempting proposition when you’re confident the value of a particular currency is going to rise.
One of the best platform for crypto-crypto trading is Binance.
5. Cryptocurrency Stock Trading
Another alternative is to buy and trade stocks in cryptocurrencies rather than the currencies themselves.
Much like crypto-crypto trading the aim is to buy low and sell high between different currencies, except you’re dealing with stocks rather than the actual coins.
Just keep in mind that cryptocurrency trading is a 24-hour market, unlike the traditional stock market (crypto stock exchange is not part of the regular stock exchange).
What Should I Know Before I Start Cryptocurrency Trading?
If you’re an experienced trader – particularly in Forex – then all the same basic principles apply. However, there are some significant differences that make cryptocurrency trading unique from anything else in the financial market.
The Crypto Market Is Insanely Volatile
The most important thing to know about cryptocurrency trading is that the market is insanely volatile.
There are a number of reasons for this, namely because there’s no guarantee against market value and the fact you can walk into any store and exchange cash for goods (something you can’t yet do with cryptocurrencies).
The volatility of the cryptocurrency market will level out eventually, of course, but let’s not label volatility as a bad thing. This is where the insane opportunities in crypto trading come from and there’s no guarantee how long this will last.
It’s all about risks and rewards.
Technology Is a Key Factor
Each cryptocurrency is a technology in its own right and no two are exactly the same. In many cases, the differences are few and far between but there are various cryptocurrencies that offer distinctly unique features.
For example, Ripple (which is now in the top five most valuable cryptocurrency after Bitcoin) is unique in the sense that it supports centralised institutions like banks. Speed is crucial to Ripple, allowing faster transfers than other cryptocurrencies – a key selling point.
The best tip we can give you when it comes to crypto trading (or investment for that matter) is to analyse the technology behind each currency, not only their graphs.
Currencies that bring innovative features related to speed, security and general ease-of-use are more likely to be adopted by people as cash alternatives in the future.
It’s a Minefield Out There
The unregulated nature of cryptocurrency and the hype circulating make for a bad combination. People want to get in on the action and there’s little stopping con artists from creating their own cryptocurrency or exchange platform to take advantage of gullible traders.
We’ve just seen BitConnect close its trading platform after growing speculation that it was a Ponzi scheme. A number of investors and traders have said they lost hundreds of thousands by trading on the platform and the lawsuits have already begun.
Avoid pyramid schemes, cloud mining, “earn interest” schemes and anything that sounds too good to be true.
What Are The Best Platforms For Cryptocurrency Trading?
Now that we’ve covered all of the essential info you need to start trading cryptocurrencies, let’s take a look at some of the best trading platforms available in 2018.
eToro
- Derivatives: No
- Futures: Yes
- Hacked: Never
- Margin trading: Yes
- Security: Good
- Tradable coins: BTC, ETH, DASH, ETC, LTC, XRP
- Deposit fees: None
- Withdrawal fees: Yes
eToro is one of the most innovative digital trading platforms and it’s got by far the best user interface you’ll come across – including a mobile version that makes trading on the go a breeze.
As things stand, eToro doesn’t have an exchange platform which means you can’t trade owned cryptocurrencies, meaning you’re limited to CFD trading for now.
However, this will change soon as the company is preparing to releases its own wallet and an exchange platform.
Besides that, it’s got great educational resources and a number of innovative features like Copy People where you can follow the moves of successful investors. Above all, the company has a good record regarding withdrawals and user reviews are largely positive.
We also have an eToro Review if you need more details.
Bitfinex
- Derivatives: No
- Futures: No
- Hacked: 2016
- Margin trading: Yes
- Security: Good
- Tradable coins: Bitcoin, Ethereum, Ethereum Classic, Zcash, Monero, Litecoin
- Deposit fees: No
- Trading fees: 0-0.2%
- Withdrawal fees: No
Bitfinex made headlines in 2016 for falling victim to the second largest breach of a crypto exchange platform, resulting in a loss of $72 million worth of BFX tokens.
Bitfinex’s response was interesting, though. It chose to spread the loss across all users rather than letting those who got hacked take all of the brunt. It also promised to fully compensate users (eventually) while issuing them BFX tokens to the same value as their losses.
Such measures are reassuring to see.
Despite the hack, Bitfinex has solid security features in place and we’re hoping important lessons were learned in 2016.
The user interface is excellent and optimised very well for mobile, but you can also download official apps for iOS and Android.
The only sticking point is the company’s customer service team has a poor reputation, but overall reviews are positive – which is pretty rare for a crypto exchange platform.
For more details, visit our Bitfinex Review.
Binance
- Derivatives: No
- Futures: None
- Hacked: Never
- Margin trading: No
- Security: Excellent
- Tradable coins: Bitcoin, Ether, Ethereum Classic, Zcash, Ripple, BNB, ARK, AST, BNT, BQX, BTG, CTR, DASH, DNT, ENG, ENJ, EOS, Monero, Litecoin
- Deposit fees: None
- Trading fees: 0.05% to 0.1%
- Withdrawal fees: None
Binance boasts some of the best security you’ll find on a cryptocurrency trading platform. The downside is this makes trading on Binance a bit slower than other platforms but it’s reassuring to feel like you’re being protected, even if it can be a touch frustrating at times.
In terms of trading on Binance, the exchange is split into “basic” and “advanced” tabs but even the basic tab isn’t the place for beginners to start their crypto trading adventure.
You won’t find any user guides to point you in the right direction and the navigation isn’t exactly intuitive, even once you know what the figures and graphs are telling you.
In fact, usability in general isn’t a strong point for Binance. If you want the best security and an extensive range of tradable coins, this could be the one for you.
Binance is currently the most favourite cryptocurrency trading paltform within the crypto community, which is a statement on its own.
For more infomation, visit our Binance Review.
CEX.io
- Derivatives: No
- Futures: None
- Hacked: 2013
- Margin trading: Yes
- Security: Good
- Tradable coins: Bitcoin, Ethereum, Litecoin
- Deposit fees: Yes
- Trading fees: 0.1-7%
- Withdrawal fees: Yes
CEX was one of the first Bitcoin trading platforms to hit the scene, back in 2013. Sadly, it didn’t take long for the platform to get hacked but the real concern is the volume of negative user feedback.
You’ll find complaints all over the web from people who say they’ve never received their fund withdrawals from CEX.
We managed to get a withdrawal released without any issues and we’re not the only ones, that much is clear. But the sheer number of people screaming scam in regards to CEX makes us hesitant to recommend it.
IQ Option
- Derivatives: Yes
- Futures: None
- Hacked: Never
- Margin trading: Yes
- Security: Excellent
- Tradable coins: Bitcoin, Bitcoin Cash, Bitcoin Gold, Dash, Ethereum, Ethereum Classic, Litecoin Dogecoin, Litecoin, Monero, OmiseGo, Ripple, Zcash
- Deposit fees: No
- Withdrawal fees: Yes
IQ Option debuted as a Forex broker in 2013 and has since earned itself a reputation as one of the most reliable platforms in the industry since then.
The company is an official sponsor of Austin Martin and you can tell it takes this reputation seriously, which means you can forget about any scam concerns with its crypto trading system.
As you might hope, IQ Option has a good track record when it comes to withdrawals and there’s no minimum withdrawal amount. There’s a healthy supply of training material to help you get to grips with the platform and the user interface is pretty good as well.
Kraken
- Derivatives: No
- Futures: None
- Hacked: Never
- Margin trading: Yes
- Security: Excellent
- Tradable coins: Bitcoin, Ethereum, Ethereum Classic, Dogecoin, Litecoin, Zcash, Augur, Factom, Ripple, Monero, Dash, DAO, Iconomi, Stellar
- Deposit fees: In some cases
- Trading fees: 0.0 – 0.26%
- Withdrawal fees: Yes
Kraken has all the makings of a quality crypto trading site: top security features, a relatively easy verification process (about as easy as you want one to be), wide support for coins and minimal trading fees.
Trading on the platform is straightforward enough but the interface is pretty buggy. It seems problems are particularly common when it comes to withdrawing funds from Kraken and the customer support team isn’t much help when something goes wrong.
A quick search brings up a worrying amount of negative reviews.
So Where Should I Trade Cryptocurrency?
Choosing a crypto trading platform is a tricky business. There are plenty of scams about and even more seemingly legitimate companies that fall short on customer service when users’ money is on the line.
We recommend eToro as the best place to trade online, especially as it’s about to release its own wallet and exchange to create a powerful all-in-one trading platform.
In the meantime, it’s got one of the best user experiences you’ll find among trading platforms and all the educational videos you need to learn the ropes of crypto trading.
This isn’t only an option for beginner traders either. We’re talking about an industry innovator with some of the most exciting features available while catering for the issues that matter most: security and reliability.
The reviews speak for themselves.
After picking the best place to trade cryptocurrency online, check our Tips For Profitable Cryptocurrency Trading.
