The craze of cryptocurrencies is increasing day by day. And, with each passing day, many traders are getting connected with the cryptocurrencies trading arena. Trading cryptocurrencies in the UK can be highly profitable but at the same time, crypto trading can be more challenging if you have no knowledge of what you are doing. But, with the right knowledge, you can change the entire game for yourself.
In this guide, we will explain everything that you should know about trading cryptocurrencies in the UK, make sure to stick to us until the very end of the article.
What is Cryptocurrency Trading?
Cryptocurrency trading works like any other trading, the only difference is that in cryptocurrency trading you buy and sell digital currency pairs. Naturally, to make a profit, you sell a crypto pair for more than you paid for it. Cryptocurrency trading can be done only in pairs, which consist of two assets against each other. Your job is only to predict whether the value of the crypto pair will rise or fall and make your buying and selling decisions accordingly.
To trade cryptocurrencies in the UK, all you are required to do is to find the best broker for you and then start enjoying trading from the very comfort of your home.
Also Read Investors guide on Best Ways to Invest Money UK- Complete Guide
How Cryptocurrency Trading in the UK Works?
To trade cryptocurrencies, you first need to choose a crypto pair and then place an order on it.
Trading cryptocurrency is similar to forex trading that means trading cryptos can only be done in pairs and each pair has its own exchange rate which keeps on changing by seconds. The pair which is high on demand in buying will rise in value and if it is high on demand in selling naturally the price will decrease.
The cryptocurrency sector offers two types of pairs, which are:
- Crypto-to-Fiat: Crypto-to-Fiat means a pair consisting of one crypto and one fiat currency. Examples are ETH/USD
- Crypto-Cross: Crypto-Cross means a pair consisting of crypto against another crypto. For example, if you plan to trade Bitcoin against Ethereum, you would be trading BTC/ETH.
Note: Beginners are advised to avoid Crypto-Cross pairs as these are more challenging.
Cryptocurrency Trading Orders
To trade cryptocurrencies you first need to create a crypto trading account on an exchange platform and then decide on a cryptocurrency pair you would like to trade. Once decided you will be required to set up an order and decide whether you want to buy or sell.
If you think the value of the cryptocurrency will increase then place a “buy order” and similarly If you think the value of the cryptocurrency will decrease then place a “sell order”.
Other than this there are several other types that you need to make a selection on.
You will opt for a market order if you wish to buy or sell an order executed at the next available price and similarly, you will opt for a limit order if you wish to buy or sell an order executed at a specific entry price.
Note: Limit orders are good for short-term cryptocurrency trades.
Cryptocurrency Risk Management Orders
To limit the risk of losing your money you are advised to consider setting up ‘stop loss’ and ‘take profit’ orders.
Stop-loss order as the name suggests stops the loss you may incur. In more simple terms, a stop-loss order allows you to limit the amount of money you may lose from the trades. In this, you are required to specify the price on which you would like to exit the position when the trade goes in the wrong direction.
Take- Profit order allows you to lock in your potential profits. Just like a stop-loss feature this also helps in mitigating your losses by locking in your profits.
Well, with the help of these features you don’t worry about closing positions as by setting up these features the positions are automatically closed.
Cryptocurrency Market Strategies
There are many cryptocurrencies market strategies that seasoned investors deploy. Below are the most popular trading strategies you can apply to boost your trading game.
Swing trading is a trading strategy in which traders hold their position for longer than a day and sell them when their crypto’s value rises. It’s the exact opposite of day trading. The position can be kept on hold for several weeks also, this is especially the case when the cryptocurrency pair remains in a prolonged upward or downward course.
Market Correction simply means that there is a temporary interruption in the market and market correction corrects that interruption. For example, suppose you hold BTC/ETH and want to cash out your profits. And, when you cash out your profits it has an impact on the price value of an asset. And, with more sellers than buyers, the upward trend will naturally take turns, and this is when market correction takes place.
What Cryptocurrencies can you trade?
Today we have thousands of cryptocurrencies in circulation, and the most dominating of them is Bitcoin. Bitcoin is the most popular and most dominating digital coin that is known even by those who have no knowledge of what cryptocurrencies are. Below are the cryptocurrencies that you can trade in pairs
- Bitcoin Cash
- Binance Coin
- Ethereum Classic
Benefits of Trading Cryptocurrencies
If you still are not convinced whether or not you should trade cryptos then below are some benefits that will surely change your mind.
When trading cryptocurrencies with UK CFD brokers, you can enjoy the benefit of leverage of up to 1:2 as per the European Securities and Markets Authority (ESMA) Regulations. Applying leverage simply means that you can trade with more money than you have in your trading account. This naturally multiplies your stakes by 2. For example, if you place a buy order for £400 on whatever pair, that means you are actually reading £1,000.
There are several other brokers also, such as Finmax that offer a much higher leverage ratio of up to 1:10. That means you can trade cryptos with 10 times more money than you have in your trading account. And, this sure is highly beneficial that attracts traders towards itself.
The best thing about trading cryptocurrencies is that cryptos can be traded at any hour of the day. Unlike other trading assets, like trading stocks and shares which can only be traded between 8 pm and 5 pm, Monday to Friday, cryptocurrency trading is active 24/7 round the clock. That makes crypto trading more convenient.
Buy and Sell position
When trading cryptocurrencies you have the privilege of getting benefited from both rising and falling situations of the market. So, when buying cryptos you don’t have to worry about in which direction the market will move, whether the value will rise or not because you can make gains irrespective of which way the market will move, which is the exact opposite of why you buy shares.
Risks involved in cryptocurrency trading
Cryptocurrency Trading can be highly beneficial but still, there are many risks to trading cryptocurrencies that are as follow:
High volatility in crypto’s value isn’t something rare or new. In Fact, cryptocurrencies are known for their price fluctuations, rising or falling by 10 per cent in a single day is common in the crypto arena. That’s why make sure to set stop loss and take profit features in each of your trades so that you are able to mitigate the risk of losing money and lock in profits.
Unregulated cryptocurrency exchanges
There are many exchanges that are unregulated. These unregulated exchanges do not require your IDs as they don’t undergo verification and all the deposits, Withdrawals, and everything is done in Digital Currencies. That’s why many traders choose these exchanges.
But we highly recommend you to not choose such exchanges because due to the nonregulation of the platform your funds are always at risk. And, in case the exchange or the broker dupes away with your money you cannot even raise a concern. Therefore, only choose the Platforms that are regulated by the FCA.
Cryptocurrency automated trading software
Crypto automated trading software is trading robots that execute trades automatically on your behalf. This trading software is highly in demand, all kinds of investors are relying on this trading software as they put off all the trading burden from their shoulders. This trading software does all the work from scanning the markets to placing the trades, keeping emotions out of the picture which often devastates your trading game.
There are thousands of trading software available in the market
Cryptocurrency Trading Signals
Cryptocurrency Trading Signals services are for those who don’t prefer automated trading software to place trades on their behalf. In trading signals services, your signal provider provides you all the details on how you should capitalize by scanning the market 24/7, it tells you about whether or not you should go long or short, what limit price you should set up, what should be your stop loss and take profit order. However, buying and selling right remains in your hands.
Things to Consider while trading cryptocurrencies
Tip #1 Check whether the platform is regulated or not.
The first and foremost thing you should confirm while choosing an exchange or a broker is whether the platform is regulated or not. If the platform is not regulated by financial authorities then you cannot trust it with your funds.
In the UK, the FCA is the regulatory platform that ensures the platform can be trusted with the funds or not. Therefore, when selecting a broker in the UK, check whether or not it is regulated by FCA if yes then the platform is safe and if the platform is regulated by other jurisdictions including ASIC and CySEC then it is icing on the cake.
Also, make sure to confirm the brokers of the platform are regulated, if not then there are chances the brokers are frauds and because of the non-regulation, you cannot raise the concern if the brokers dupe away with your money. Hence, regulation plays a crucial role.
Examples of such regulated brokers are eToro, plus 500, and Capital.com.
Tip #2 Only choose the platform that offers Commission-free trading.
It is very important to keep your trading fees to the absolute minimum. Because, when trading it is important to not put all your eggs in one basket and if your chosen broker charges commission then it’s gonna cost you higher. Therefore, make sure to choose the platform that charges no commission. eToro, Plus 500, and Capital.com are examples of such Commission free brokers.
Tip #3 Take a Cryptocurrency Trading Course
Trading cryptocurrencies can be risky for its high Volatility and for those who have no experience in trading or knowledge in cryptocurrency, trading cryptocurrencies can be even more challenging. Therefore we advise you to take a cryptocurrency trading course before you dive into trading cryptos. There are many online and offline courses available, which you can opt for According to your convenience. And, if you cannot afford trading courses then make sure to read blogs and watch YouTube informative knowledge of how to trade crypto, what are its ins and outs and what are the trading principles. Having this knowledge beforehand can help you achieve profitable trades.
Tip #4 Learn how to read charts
Before you do crypto trading you must also learn how to analyze charts so that you are able to understand the potential trends that are trending.
Tip#5 Consider Copy Trading
Trading requires years of experience and commitment. Therefore, brokers have to come up with copy trading to help beginners to make the most out of the trading. Well, the copy trading feature is unknown to many even in the Uk, but this feature is highly beneficial as it allows traders to copy positions to another trader’s account when they are opened or closed. This can be done either manually or automatically and the decision-making on how to approach the copy trading remains solely in the hands of the traders.
The Copy-trading feature is offered by eToro and is highly suitable for those who are willing to trade but have zero knowledge and experience of how trading works.
Best Cryptocurrency Trading Platforms of 2021
eToro is overall the best Cryptocurrency platform in the UK and it is the number one broker on our list also. This online broker has everything you are looking for from regulations to minimum investments to fees and commissions to various supported payment methods. This online broker is regulated by the FCA and allows you to diversify your portfolio as it offers a number of several asset classes, including stocks, ETFs, Commodities, Forex, and cryptocurrencies. Moreover, buying cryptocurrencies or other assets is free of Commission, which means you don’t have to worry about the spending cost on keeping your buy position open. On this platform, you can keep your buy position open for as long as you want as it doesn’t charge any Commission. It also allows you to access Crypto pairs via CFDs if you want to go for short-term cryptocurrency trading.
- Regulated platform
- Commission-free platform
- Offers various payment methods
- Offers copy trading feature
- Uses the latest encryption technology for the user’s safety.
- Withdrawal and inactivity fees
- Not ideal for those who like to perform technical analysis
It requires a minimum deposit of just $50, which is pretty affordable. And, to make a deposit on this platform it provides various payment methods for the convenience of its users, including a UK debit/Credit Card, bank transfer, and eWallets. Moreover, it also offers an excellent mobile application for those who prefer mobile over desktop and this app is the best trading app in the UK.
Another most popular Broker that we have on our list is capital.com. It is regulated by FCA, CySEC, and NBRB. The platform has received many accolades recently including, the Best Online Trading Platform 2020, Most Innovative Broker Europe 2020, Most Important Broker 2020, and Service Provider Europe 2020. This platform is free of any commissions, hidden charges, and fees. This platform specializes in CFD instruments and offers a wide range of cryptocurrencies. You can either trade crypto cross pairs such as TRX/BTC, BTS/BTC, or fiat-to-crypto pairs such as BTC/USD and ETH/USD.
Just like eToro, Capita.com also does not charge commissions. Spreads on this platform are also very low. For example, this platform offers you to trade XRP/USD at a very low spread of 0.04.
For beginners, this platform is highly suitable as for using this platform you don’t have to have any prior trading experience.
- Offers trading on hundreds of US and UK shares
- Provides educational support
- Commissions free platform
- Provides high-quality online courses
- Regulated by FCA, CySEC, and NBRB
- Highly secure platform
- Offers hedging to mitigate the risk
- Uses latest encryption technology
- Provides trending financial news
- Offers only CFD trading
- Do not allow to build custom trading strategies
IG is another one of the most trusted UK trading platforms that offer spread betting facilities and a CFD trading platform. This platform was developed in 1974 and its parent company is listed on London Stock Exchange. This platform is highly favourable as it follows the long-standing All the ten cryptocurrency pairs that are offered by this trading platform are quoted in US dollars. It tracks the price movements of these ten cryptocurrencies by their market capitalization.
Just like the above-mentioned platforms, this trading platform is also commission-free.
- Regulated platform
- Offers spread betting and CFD products
- Offers leverage and short selling
- Provide access to UK market as well as international market
- Offers great research department
- Offers minimum deposit $250
- $15 minimum commission on US stocks
On this platform you will get access to a wide range of cryptocurrencies, and also provides a cryptocurrency index just like IG
The platform is free from commissions and fees other than the spreads. It offers 2.1 pips on ETH/USD and 36 pips on BTC/USD. On this platform, you are also allowed to apply the leverage of 1:2 across all cryptocurrency CFDs. Apart from Cryptocurrencies it also offers access to other CFD trading instruments including, Stocks, Bonds, Interest Rates, Energies, Hard Metals, and Forex. The platform also offers an intuitive mobile application for those who prefer mobile over desktop.
- Regulated by FCA
- Commission-free platform
- Offers thousands of financial instruments
- Easy and fast account creation
- For retail clients who want to trade CFD offers leverage of upto 1:5
- Offers short selling
- CFDs only
- Not beginners-friendly
For those who are willing to take advantage of MT4, FXCM is ideal. This platform offers a good range of cryptocurrency pairs, all quoted in USD, including Bitcoin, EOS, Ripple, Bitcoin Cash, Litecoin, and many more.
The platform is regulated by FCA and does not charge any commissions. Furthermore, it offers leverage facilities and various payment modes for the convenience of its users.
- This trading platform offers MetaTrader 4 and Ninja Trader
- Regulated by FCA
- Offers mobile application
- Offers no commission and tight spreads
- Supports CFDs only.
How to Start Cryptocurrency Trading UK – Tutorial
Now that you have gained all the knowledge on what is the best cryptocurrencies trading platform in the UK that you may consider for your trading journey, you should now learn how to start cryptocurrency trading in the UK.
Here, we are taking eToro as an example to make you understand the whole procedure in a super easy manner. And, of course, because we highly recommend you to choose eToro as this platform is regulated with no commissions and hidden charges and it also allows you to diversify your trading portfolio.
Step 1: Create an account
The very first step in order to create an account is to register yourself on its official website. To do so, you are required to fill in a registration form that you can easily find on its official website. In this registration form, you will be required to enter a few of your details such as your name, username, email, phone number and also required to set a strong password. After entering all of your required details make sure to tick accept terms and conditions.
Step 2: verification Process
Once you have completed registration you will be asked to provide an ID of yourself. Don’t worry about providing it as your details are highly secured on this platform.
This is a verification process that ensures the bot isn’t trying to access the platform in your name and this process is something you cannot skip.
Step 3: Fund your account
Now that you have successfully registered on this platform you are required to fund your account by making a minimum deposit of $200 at least. This funding amount is not the fee of the robot but the working capital that is needed by the traders to execute trades.
eToro offers several payment methods for the convenience of its traders, you can choose whatever method you feel more comfortable with. The payment methods that are supported by eToro are Debit/Credit Card, Paypal, Skrill, Nettler, Bank Transfer.
Step 4: Select a Cryptocurrency
So now you have reached the final step of trading cryptocurrencies. But before you do so you have to select a cryptocurrency.
If you have the cryptocurrency you want to trade in your mind then simply go and enter it and if not then go to the ‘Trade Markets’ button followed by ‘Crypto’ and make a selection on the crypto you wish to trade.
Step 5: Set Up a Cryptocurrency Trading Order
Now you are all set to place your order. Enter the amount you want to start with and finally confirm the order. Your trade will remain active until you close it.
Cryptocurrency Trading UK can be highly beneficial as it allows you to apply the leverage of 1:2 and of course this trading is taking over the space, with each passing day crypto trading is attracting thousands of traders. However, cryptocurrency trading is not a piece of cake and for beginners, it can be even more challenging. So, before you start it, you must learn every bit of cryptocurrency trading.
Most importantly, you must only choose a regulated broker that is licensed by FCA to ensure your funds are completely safe. All the above-mentioned brokers are regulated as well as commission-free, which you may consider. And, the broker which we highly suggest is eToro, however, you are free to make your own decision.
- What are Cryptocurrencies?
Cryptocurrencies are virtual currencies. There are thousands of cryptocurrencies available today but the most dominating cryptocurrency is Bitcoin and other major cryptocurrencies are Ethereum, Ripple, Dogecoin, Litecoin, and many more.
- How can I trade Cryptocurrencies?
To trade cryptocurrencies, the first and foremost thing you require is to open an account with an online broker that is regulated by the FCA and offers you the cryptocurrency pairs that you are looking to trade. And, once you have successfully chosen the platform then the work left with you is to think whether the value of the price will increase or decrease in the short term, and act accordingly.
- Where can I trade Cryptocurrencies UK?
There are hundreds of Cryptocurrencies trading platforms available where you can trade cryptocurrencies and you can choose from the brokers mentioned above in this guide.
- How much leverage can be applied when Trading Cryptocurrencies in the UK?
When trading cryptocurrencies in the UK, you are allowed to apply a Leverage of up to 1:2.
- How can I short Cryptocurrencies?
You can place a sell order with a CFD broker if you think the cryptocurrency is overvalued.
- What is the best Cryptocurrency pair?
The most traded cryptocurrency in the market is BTC/USD, which consists of Bitcoin and the US dollar.