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Crypto trading is the practice of speculating on cryptocurrency price movements through a CFD trading account or buying and selling listed digital currencies through a crypto exchange.

CFD crypto trading involves simply trading derivatives, which enable investors to speculate on cryptocurrency price movements without owning the underlying assets. If you believe that a specific cryptocurrency will increase in value, you can long (buy) it. Alternatively, if you think it will decrease, you can short (sell) it. Both are leveraged products, which means you only need a small deposit, known as margin, to gain full exposure to the underlying market. However, your profits or losses are still calculated according to the total size of your position, and therefore, leverage will magnify gains and losses.

Crypto trading through an exchange, on the other hand, involves purchasing the digital assets themselves. To do this, you need to open an exchange account, enter the full value of the asset to open a position, and store the coins in your own wallet until you are ready to trade. However, cryptocurrency exchanges can have steep learning curves, and you must understand the technology involved and learn how to make sense of it. Some exchanges also have limits on how much you can deposit or withdraw per day, depending on whether you have verified your account or not.

How do crypto markets work?

Crypto markets are decentralized, meaning they are not supported by a central authority like a central bank. Instead, they operate across a network of connected computers. Nevertheless, cryptocurrencies can easily be bought and sold through exchanges or P2P platforms and kept in wallets. Unlike fiat currencies like US dollars, cryptocurrencies exist only as a shared digital record of ownership, kept on a blockchain network. When you want to send crypto to someone, you send the coins to that person's digital wallet. Cryptocurrency transactions are only considered final when they have been verified and added to the blockchain via a process known as mining. New coins are also created through the mining process.

What is blockchain technology?

A blockchain is a shared digital ledger of records. For digital currencies, blockchain is the transaction history for each unit of the crypto, showing how ownership has changed over time. The technology functions by recording transactions in 'blocks' with new blocks added at the front of the chain.

What moves crypto markets?

The principle of supply and demand moves cryptocurrency markets. However, unlike fiat money, since they are decentralized, they tend to be free from economic and political factors that affect fiat currencies. Although there is still much uncertainty surrounding cryptocurrencies, the following factors have a significant impact on their prices:

Supply: the total number of coins and the rate at which they are released, destroyed, or lost.

Market capitalization: the value of all the coins in existence and how users perceive this to be developing.

Press: the way digital currencies are portrayed in both social and mainstream media, and how much attention they are attracting.

Integration: the extent to which cryptocurrencies easily integrate into the underlying infrastructure, such as e-commerce payment systems.

Key events: major events like regulatory updates, security breaches, economic setbacks, and bitcoin halvings.

What is 'a spread' in crypto trading?

A spread is the difference between the buy and sell prices quoted for a cryptocurrency. When you create a position in a crypto market, you will see two prices. If you want to create a long position, you trade at the buy price, which is often slightly above the market price. If you want to create a short position, you sell at the selling price, which is usually somewhat lower than the market price.

In conclusion, it is essential to read the details on your chosen trading platform to ensure you comprehend the level at which price movements will be measured before engaging in crypto trading.