Trading with cryptocurrencies has attracted many traders and investors. Did you know that there are several different ways to trade crypto? Read further to learn more.

According to Coinmarketcap, there are at least 4,000 cryptocurrencies to choose from. Considering the rapid growth of cryptocurrency in the industry, it's only natural for investors to be lured into the volatile market with large money-making opportunities.

Essentially, there are several ways of making money from cryptocurrencies. Although it can get complicated at times, cryptocurrency trading can significantly gain returns with a relatively cheaper cost if you use the right strategy.

Trading with major cryptocurrencies has certainly evolved. Even expert traders from the more traditional asset classes began to search up higher volatility and return with cryptocurrencies.

So here we have summarized the four effective ways to trade with cryptocurrencies.

  1. Trading with cryptocurrency exchanges
  2. Buying coins in local store
  3. Cryptocurrency trading with CFD
  4. Crypto copy trading

Let's discuss them one by one in the article below.

Trading Cryptocurrencies

 

1. Trading with Cryptocurrency Exchanges

If you decided to direct trading with your cryptocurrencies, then you should buy via a cryptocurrency exchange. This means you need to open an exchange account and store your cryptocurrency in your digital wallet. While there may be several regulations or procedures when opening an account on a certain exchange, the trading features and principles across the various exchanges are mostly similar.

There are many platforms to choose from, so choose the one that suits you best. But before that, do some research and consider the following things:

  • Security
    Above anything else, the first thing you must keep in mind is the safety of the exchange. Ensure that the platform requires two-tier log-in protocols, be listed on HTTP sites, don't have a history of being fraudulent, and have a positive track record of safeguarding the users' data.

  • Transaction fees
    It is common for an exchange to charge a fee for every trade you make. Usually, it's around 0.1%, which is considerably high for short-term traders. That is why in this case, you may want to consider picking lower prices and exchanges with user-friendly interfaces, especially if you are just beginning to trade.

  • Location
    The increasing of laws and regulations makes the exchange's location significant, so it would be wise to pick a local exchange. This will ensure that you can deposit via the fiat currency that you have, which is also related to the exchange rates and fees.

  • Trading volumes and liquidity
    Some exchanges have better liquidity than others and may also be flexible depending on the cryptocurrency pairings you use.

  • Deposit and withdrawal process
    In the volatile cryptocurrency market, speed is highly important. Usually, it takes longer to deposit funds or withdraw some money, so make sure that the platform can process it quickly so it won't affect your trade.

  • Support
    We can tell a lot about a company by its customer support. Find an exchange that is responsive to its clients' questions and complaints. It would also be helpful to read reviews from other traders.

  • Payment methods
    Some crypto exchanges only accept PayPal as a payment method, while others are more flexible and offer other options such as credit card, bank transfer, wire transfer, etc. Though what matters is finding the one that offers the payment method you need, it's always best to pick an exchange that provides multiple payment methods.

  • Compatible digital wallet
    If you already have a crypto wallet before opening an account in an exchange, check if the exchange supports your wallet. This may increase the time needed to buy or sell a particular digital currency, but it's necessary to prevent theft.

 

2. Buying Coins in Local Stores

Apart from the most common cryptocurrency trading above, you can also buy Bitcoin from certain local stores. Usually, you will have to provide basic information about yourself, including name, residence, and Bitcoin wallet address to receive the Bitcoin purchases.

The process is very fast, only about 10 minutes or less. Not only stay anonymous and private with your purchase, but you can also save time with such a process. Before purchasing, make sure to own a compatible digital wallet.

However, compared to transactions in crypto exchanges, it would be harder to purchase a large amount of Bitcoin in local stores. Also, the price for this service is higher than regular exchanges due to its simplicity and anonymity features. And if you're doing cash trade in person, it would be best to do it in a public space to avoid scams and theft.

 

3. Cryptocurrency Trading with CFD

Are you looking for intraday or even intraweek trading? If so, the CFD feature offered by a number of brokers can be a great choice than trading an actual coin via crypto exchanges. Contract for Difference (CFD) is a derivative that allows traders to trade and invest by contracting on the platform without having to take ownership of the related asset. Thus, you basically engage in a contract with the broker to execute a crypto trading order under your name.

In cryptocurrency CFD trading, you can use various trading instruments that would help you minimize the risk of losing the trade if the market decided to move against you. That being said, you are free to manage the digital currency and use any strategy you think fit. The broker won't interfere with you in the process. Therefore, it is crucial to pick the right platform and broker to trade cryptocurrency via CFD.

Make sure that the platform is fast, easy to use, and accessible across devices. Also, it would be much convenient if the broker provides various trading features such as access to market research and trading instruments for technical analysis that is becoming more significant in crypto trading these days.

Not all traders know about CFD trading, so many of them would prefer to buy Bitcoin from exchanges instead when there are downsides to the method. Generally speaking, the processing time for buying cryptocurrency is relatively long and it is unregulated, so the risk is definitely bigger there.

However, you can easily sidestep these concerns by trading cryptocurrencies via CFDs. This method allows you to trade with very fast transaction times, which is particularly useful in the volatile market of digital currency. It's even better if you pick a safe and regulated broker, so your trading with cryptocurrency will be authorized in the same manner as normal forex trading.

Moreover, CFD trading also offers many other advantages, namely:

  • Instant order executions that could narrow the gap between order and execution price.
  • You can make purchases with fiat money, unlike purchasing actual cryptocurrencies that require you to first own the cryptocurrency to acquire the cryptocurrency of your choice.
  • You are not required to have compatible digital wallets.
  • CFD trading platforms may be more suitable for professionals, but the commonly used MetaTrader 4 is also available for novice traders.
  • You can enter trades either long or short with higher leverage.

 

4. Crypto Copy Trading

Lastly, you can earn money by copy trading with cryptocurrency. Copy trading is quite popular, especially among beginners. It allows them to copy trades from expert traders and earn the same amount of profit in a proportion of the fund they invest. While trading alone can be complicated at times, copy trading offers practicality and learning opportunities with considerable returns.

In this case, eToro is an excellent platform to begin with as it provides a user-friendly platform, both for newbies and professional traders. It is very convenient because eToro can act as an exchange, platform, and wallet so it is an all-in service for you.

🌐 Website
www.etoro.com
Leverage
1:400
💼 Regulation
💲 Min Deposit
$200
Year Established
2007

Accepts US traders
Personal manager
Trading contests
Segregated accounts
Free education
Compensation scheme
Negative balance protection
Swap
Low spread eur/usd
Hedging
Islamic account
Affiliate program
Trading via API
Interest rate on funds
Copy trading
WebMoney
PayPal
Skrill
Wire transfer
Neteller

eToro established in early 2007, with a mission to make trading accessible to anyone, anywhere, and reduce dependency on traditional financial institutions. The company has head offices in the United Kingdom, Cyprus, USA, and Australia.

eToro (Europe) Ltd operates as a Financial Services Company authorized and regulated by the Cyprus Securities Exchange Commission (CySEC) under license no. #109/10. Meanwhile, eToro (UK) Ltd is authorized and regulated by the Financial Conduct Authority (FCA) under the license FRN 583263.

As for eToro AUS Capital Pty Ltd, the legal standing is acknowledged by the Australian Securities and Investments Commission (ASIC) to provide financial services under Australian Financial Services License 491139.

A broker that belongs to the 4-digit type, eToro offers both short-term options for day traders and long-term options for investors, such as their innovative Smart Portfolios, a fully managed thematic portfolio.

Since 2007, eToro has been at the forefront of the Fintech revolution. The most recent was launched in 2017, which is Smart Portfolios powered by Machine learning Al. Beyond developing Smart Portfolios, the company integrated Microsoft's machine learning technology into Momentum DD.

The new Smart Portfolios investment strategy uses artificial intelligence to find the steadiest traders who are most likely to generate a double-digit return and bundle traders into one fully-managed portfolio. eToro has hundreds of financial assets for trading across several categories including stocks, commodities, crypto assets, currencies, indices, and ETFs. Each asset class has characteristics and can be traded using a variety of investment strategies.

Some positions on eToro involve ownership of underlying assets, such as non-leveraged positions on stocks and cryptos. Employing CFDs will enable a variety of options, such as leveraged trades, short (sell) positions, fractional ownership, and more. For example, traders can invest as little as USD100 in gold, even if a single unit of gold cost USD1,000. Some of eToro's most popular CFD commodities include gold, oil, natural gas, silver, and platinum.

Currencies are traded on eToro only as CFDs. Also, CFDs enable Sell (short) positions and leveraged trade, even for assets that don't offer the option in traditional trading. Some of the popular currencies include EUR/USD, GBP/USD, AUD/USD, USD/JPY, and USD/CAD.

Furthermore, An Exchange-Traded Fund (ETF) is a financial instrument comprising several assets grouped to serve as one tradable fund. After opening an account in eToro, traders can invest as little as USD250 in an ETF that costs USD500. Some of the popular ETFs on eToro include SPY, VXXB, TLT, and HMMJ.

However, eToro also offers additional functions using CFD trading. All leveraged ETF positions in the UK are under FCA regulations. Meanwhile, all CFD positions executed by eToro Australia are under ASIC regulations.

The company has other advantages. In all financial assets that can be traded, eToro does not charge any deposit or trading frees other than spreads.

eToro charges a USD25 fee for withdrawals and the minimum withdrawal amount is USD50. Long (Buy), non-leveraged crypto, stock, and ETF positions are not executed as CFDs and do not incur any fees. eToro does charge overnight or weekend fees for CFDs positions, such as leveraged positions and short (sell) orders.

Fee updates always apply to open positions. Fees are subject to change at any given time and could change daily, without prior notice, depending on market conditions.

As a beginner, trader can use CopyTrading eToro. Different from the features of other brokers, traders can copy the strategies of professional traders without fee or profit-sharing. Therefore, 100% profit is fully owned by traders. For example, while trader A who is copied by trader B, produces a profit of 10% this month, then trader B also gets a profit of 10%.

The company is the world's leading social trading network. Since eToro operates in complete transparency, each trader has valuable information on their eToro profiles, so other traders that are interested to copy their trades can have assistance in creating their best portfolios.

Another feature that is unique to eToro is the personalized, social News Feed. Just like on any social media, traders can post their updates on feed, comment on other's posts, and gradually create a feed that is tailor-fitted to trader's trading and investing interests. On eToro social trading platform, traders will also get notifications when a trader writes a new post and many other important updates.

With over 15 million users worldwide, eToro offers a wide variety of leading cryptocurrencies to trade with. Some of the options are as follows:

  • Bitcoin (BTC): The largest digital currency with the first implementation of blockchain technology.
  • XRP by Ripple Labs (XRP): This cryptocurrency enables real-time payments with faster transaction speed and lower costs.
  • Ethereum (ETH): Often considered the second leading cryptocurrency after Bitcoin, this digital currency has received international recognition from highly reputable brands including Microsoft and Intel.
  • Litecoin (LTC): This is the first cryptocurrency to implement SegWit that could speed up transaction times.
  • Dash (DASH): Unlike other cryptocurrencies, Dash uses a decentralized autonomous organization (DAO).
  • Stellar Lumens (XLM): This digital currency operates in a unique algorithm so Stellar can facilitate transactions between multiple currencies.
  • NEO (NEO): Also known as the "Chinese Ethereum", NEO was designed to be easily modified and have no forking ability.
  • EOS (EOS): since its first release, EOS becomes one of the top cryptocurrencies with a powerful open-source infrastructure that can support thousands of commercial-scale decentralized applications (DApps).

You can follow many trusted experts with profitable strategies and stay updated with each crypto's trends by using eToro's advanced charts and analytical tools. The other advantage is that other than spreads, you can buy cryptocurrencies without having to pay any deposit fees via broad options of payment methods, including credit card, Skrill, PayPal, and others.

However, trading on the platform requires you to pay in USD. If you deposit or withdrawal in a currency other than USD, then a conversion fee will be applied accordingly. As for withdrawals, eToro charges $5 per withdrawal and the minimum withdrawal amount is $50.

 

Conclusion

All in all, cryptocurrencies are no longer inaccessible trading grounds only meant for high-tech traders and companies. It is now available and reachable for everyone. It offers a huge opportunity to make money and improve your trading skill. With the growing enthusiasm from people all over the world, cryptocurrency will certainly continue to expand and mature. By understanding the 4 methods of trading as explained above, you will know enough to start trading with cryptocurrency.

 

However, keep in mind that trading cryptocurrency is just as risky as trading with any other asset, and the market is incredibly volatile. So, make sure to prepare a strong strategy before you enter the market. It's also advisable to start with a demo account, so you won't lose money on your first try.