What Is Cryptocurrency Trading?

Crypto Trading in One Sentence

A cryptocurrency is a digital asset that exists on a blockchain network, with its price set by supply and demand on exchanges rather than by any central authority. Trading it means taking a view on where that price is going, and either owning the asset directly or using a derivative instrument to profit from the move without custody.

The distinction between owning crypto and trading it matters more in this market than in any other. Both approaches carry significant risk. They carry different kinds of risk, through different mechanisms, with different practical implications. Understanding the difference before choosing an approach is essential.

Buying Crypto vs Trading Crypto CFDs

When you buy cryptocurrency on an exchange, you receive actual coins. They are recorded on the blockchain, held in a wallet you control (or that the exchange controls on your behalf), and accessible through a private key. The value of what you hold rises and falls with the market price. The risk includes the price falling, the exchange failing, your wallet being compromised, or the network itself experiencing a problem.

When you trade a crypto CFD through a regulated broker, none of that applies. You hold a contract that tracks the price of Bitcoin or Ethereum. There is no wallet, no private key, no blockchain transaction. Your exposure is to the price. When you close, the difference between your entry price and exit price is settled in cash.

What Makes Crypto Different from Forex or Stocks

Three structural differences separate crypto from the markets most retail traders encounter first.

The first is market hours. Crypto runs 24 hours a day, every day of the year. There is no London open, no New York close, no weekend pause. For forex traders used to defined sessions, this requires an adjustment in how you think about overnight risk and position management.

The second is the absence of a central authority. When the Bank of England makes a policy decision, the pound reacts. There is no equivalent institution backing Bitcoin. Crypto prices are purely a function of market sentiment, supply mechanics, and demand. This makes crypto more susceptible to narrative-driven moves — both upward and downward — that can feel disconnected from any underlying fundamental change.

The third is volatility. A 1% daily move in GBP/USD is considered significant. A 10% daily move in Bitcoin is not unusual. This higher baseline volatility, combined with the 24/7 market, creates a risk profile that is materially different from traditional markets.

The Main Assets Traders Actually Watch

Bitcoin (BTC) is the original cryptocurrency and remains the most liquid by daily trading volume. It has the tightest spreads of any crypto asset on regulated platforms and is the most widely documented in terms of price drivers and on-chain data.

Ethereum (ETH) is the second largest by market capitalisation and the dominant platform for decentralised finance applications. Its price behaviour is often correlated with Bitcoin but has its own distinct narrative drivers, particularly around protocol upgrades and development activity.

Smaller cryptocurrencies, frequently called altcoins, carry a materially different risk profile. Lower liquidity means wider spreads and a greater price impact from any single large order. Many smaller projects have failed entirely, with tokens falling to zero. This does not make altcoins untradeable, but the analysis required and the risk parameters appropriate are significantly different from those for Bitcoin or Ethereum. Beginners are better served by understanding the two largest assets well before exploring anything further down the market cap list.

UK Regulatory Context

The FCA has taken an active approach to consumer protection in crypto markets. Spot crypto exchanges offering services to UK retail clients must be registered with the FCA for anti-money laundering and counter-terrorism financing purposes. The FCA has also taken action on certain retail crypto derivative products at various points. The overall regulatory framework is less settled than for established asset classes like forex and equity CFDs.

The practical implication for retail traders: use FCA-authorised brokers for any crypto CFD or spread betting activity. Check the FCA Register before opening any account for crypto trading. Avoid unregistered or offshore platforms offering crypto exposure without FCA authorisation.

Risk Specific to Crypto

The combination of high volatility and 24/7 markets creates a specific challenge that does not exist in the same form elsewhere: your position can move substantially while you are asleep.

In forex, you can broadly anticipate when the major news events and session overlaps occur and structure your risk accordingly. Crypto has no equivalent structure. A major exchange hack, a regulatory announcement from a significant jurisdiction, or a large sell-off in any major token can happen at any hour and move the entire market within minutes.

This makes stop losses particularly important in crypto, and it makes position sizing particularly important alongside them. Using the same 1 to 2% account risk rule that applies to other leveraged instruments does not change in crypto — if anything, the argument for keeping risk per trade toward the lower end of that range is stronger here than elsewhere.

The What Is Leverage page covers the mechanics of position sizing in more detail. The risk calculator lets you calculate the correct unit size for any position before you enter.