Home Trading Cryptocurrency Trading UK Guide 2023
Kane Pepi

When Bitcoin first launched just over 11 years ago, nobody could have imagined just how big the digital currency space would eventually become.

Although the cryptocurrency industry is still growing, it is now a multi-billion pound trading arena. As such, it is now possible to buy, sell, and trade cryptocurrencies through an online broker.

In this guide to cryptocurrency trading for beginners, we explain everything there is to know about cryptocurrency trading in the UK.

This includes a Layman’s overview of how cryptocurrency trading works. including what digital coins you can access, what risks and opportunities you need to consider, and ultimately – how you can get started today.

What is Cryptocurrency Trading?

What is cryptocurrency trading?Put simply, cryptocurrency trading is the process of trading digital currency pairs with the view of making a profit. In this sense, the investment space works exactly like the forex trading in the UK.

This is because you will be speculating on the future value of two competing currencies. But, instead of trading the likes of the US dollar and British pound, you will be trading cryptocurrencies such as Bitcoin and Ethereum.

With that said, there are typically two types of UK cryptocurrency trading categories that you can engage with; fiat-to-crypto and crypto-cross pairs.

Below is an explanation of how each trading stream works.

Fiat-to-Crypto Pairs

The vast bulk of the UK cryptocurrency trading scene is dominated by fiat-to-crypto pairs. Each pair will contain one fiat currency and one cryptocurrency.

For example, the pair ETH/USD would consist of Ethereum and the USD dollar, while BTC/GBP would contain Bitcoin and the British pound.  Much like ‘real-world’ forex pairs, crypto-to-fiat pairs will change in price near-enough every second. This paves the way for plenty of trading opportunities.

Let’s look at an example of how a fiat-to-crypto trade would work in practice.

  • You want to trade BTC/USD – which is the most traded cryptocurrency pair in the industry
  • The current price of the pair is $12,500
  • This means that for every 1 Bitcoin, you would get $12,500
  • You think that the exchange rate of BTC/USD is likely to go up, so you place a buy order
  • A few hours later, BTC/USD increases by 3%
  • You close the position by placing a sell order, walking away with 3% more than you started with

As you can see from the above example, cryptocurrency trading in the UK works just the same as forex. You simply need to find a pair that you like the look of and then determine whether you think it will go up or down in value.

Crypto-Cross Pairs

This particular segment of the UK cryptocurrency trading arena is less common than fiat-to-crypto pairs, but we’ll briefly run you through it nonetheless. In a nutshell, crypto-cross pairs will not contain a fiat currency like the US dollar or Japanese yen. Instead, the pair will contain two competing cryptocurrencies.

This might include pairs such as:

  • BTC/ETH
  • BTC/XRP
  • BCH/BTC
  • ETH/EOS

Crypto-cross pairs are more complex to trade, as you don’t have a fiat currency to refer back to. In other words, you are trading the value of one cryptocurrency against another. As such, it can be challenging to know exactly how much you are gaining or losing.

After all, you will eventually need to exchange your cryptocurrency profits back to GBP, which will fluctuate in value!

Investing in Cryptocurrencies

It is crucial to note that there is a clear difference between trading cryptocurrency and investing in it. Everything we have discussed on this page centres on cryptocurrency trading, meaning that you will be speculating on the short-term price movement on your chosen pair.

As we uncover in more detail later, most cryptocurrency traders will either engage in a day trading or swing trading strategy. Meaning that positions are kept open anywhere from a few minutes to several weeks. However, if you are looking to invest in the long-term value of cryptocurrencies, then you will not actually be trading cryptocurrency.

invest in Bitcoin long-term

Instead, you will be purchasing the underlying asset and keeping hold of the coins for several years. This is no different from investing in a blue-chip stock and keeping it in your portfolio until you are ready to cash the shares out. If this is something you are interested in, you’ll want to use a safe and cost-effective broker like Coinbase.

Crucially, you can buy cryptocurrencies like Bitcoin and Ethereum without paying any fees or commissions. In addition, the coins will be stored with the broker until you sell them.

What Cryptocurrencies Can You Trade?

There are thousands of cryptocurrencies active in the market, meaning that you have plenty of pairs to choose from. Before we get to that, you should note that most FCA brokers will only host cryptocurrency pairs that contain the US dollar.

This is because the US dollar is the de-facto currency in the industry. Much like it is with commodities like oil, gold, silver, and natural gas.

Nevertheless, we’ve listed some of the most commonly traded cryptocurrencies below:

  • Bitcoin
  • Ethereum
  • Bitcoin Cash
  • Ripple
  • Dash
  • Litecoin
  • Ethereum Classic
  • EOS
  • Cardano
  • Binance Coin

If you want to access small-cap digital currencies like ERC-20 tokens, you will likely need to use a conventional cryptocurrency exchange. You should tread with caution here, as most exchanges operate unregulated.

Moreover, very few offer traditional deposit methods like a debit/credit card or bank transfer. Even if they do, transaction fees are often extortionate.

Why Trade Cryptocurrencies?

Cryptocurrencies fall within the remit of ‘alternative’ investments. That is to say, they are a far cry from traditional asset classes like stocks, ETFs, mutual funds, or real estate. With that said, there are several key reasons why cryptocurrency trading in the UK is becoming so popular. We’ve gone into more detail below.

24/7 Trading

When trading traditional marketplaces, you are usually capped by fixed trading sessions. For example, the London Stock Exchange is open Monday to Friday, between the hours of 8 am and 4.30 pm. Outside of these hours, you will not be able to place buy or sell positions.

This can be particularly frustrating if you want to take advantage of an investment opportunity, or you want to offload shares that are going down in value.

This isn’t the case with trading cryptocurrency in the UK scene, as the markets operate 24 hours per day, 7 days per week. After all, you will be joining millions of fellow traders worldwide, so there is always good activity and volume around the clock.

Profit From Rising and Falling Markets

When trading cryptocurrencies in the UK, you are best advised to use a regulated CFD trading broker. In doing so, not only can you be 100% sure that your money is safe, but you will have a range of trading tools and features at your disposal.

At the forefront of this is the ability to profit from both rising and falling markets. By this, we mean that you will always have the choice between a ‘buy’ and ‘sell’ order.

  • By placing a buy order, you are speculating on the value of the cryptocurrency pair going up
  • When placing a sell order, you are speculating on the value of the cryptocurrency pair going down

This allows you to enter make gains no matter how the cryptocurrency markets are performing.

Leverage

Leading on from the section above, cryptocurrency trading platforms that specialise in CFDs also permit leverage facilities. For those of you who are unaware, this allows you to trade with more than you have in your account. If you are a retail trader based in the UK, you will be capped by the limits imposed by ESMA.

On cryptocurrencies, this stands at 1:2. Put simply, this means that you can trade cryptocurrencies with twice the amount than you have in your account. So, a £500 balance would permit a buy or sell order worth £1,000.

With that said, if you seek even higher limits, it might be worth considering a regulated offshore broker like FinmaxFX. In doing so, you will have access to cryptocurrency trading leverage of 1:10. This means that you can trade with 10 times the amount you have in your account.

Cryptocurrency Trading Risks

All forms of trading come with an element of risk. As an emerging asset class, the risks of trading cryptocurrencies are much higher than that of stocks and shares. After all, you have decades worth of historical data and information to feed off of, alongside a heavily regulated infrastructure. Cryptocurrencies, on the other, have been around for just 11 years.

In particular:

  • Volatility: Cryptocurrencies are far less volatile than they once were. However, it is still not overly uncommon for the value of digital currencies to increase or decrease. Sometimes by double-digit percentages in the space of a single trading day. As such, both your profits and losses can move at unprecedented rates.
  • Spreads: When assets possess volatile characteristics, this often results in wider spreads. In turn, this can add to your trading costs. This is often the case with cryptocurrencies, so it’s important to bear this in mind.
  • Unregulated Platforms: Although all of the brokers that we discuss on this page are regulated, not all providers are. This is especially the case with cryptocurrencies, as much of the industry operates without the backing of a tier-one licensing body. As such, make sure your chosen broker is regulated before signing up.

Ultimately, there is no guarantee that you will make money by trading cryptocurrencies, so make sure that you consider the risks before taking the plunge.

Cryptocurrency Trading Strategies

Those making money in the UK cryptocurrency trading arena do so because they have at least one solid strategy in place. Without one, you will be trading blindly. There are many different strategies to choose from, each with their own risk vs reward ratios.

Below we have listed a few different trading strategies regularly used by traders.

Day Trading

Day trading involves entering buy and sell positions on a super short-term basis. In fact, rarely will day traders keep a position open overnight. On the contrary, the trader might close a position a number of hours or even minutes after entering the market.

cryptocurrency day trading

With this in mind, day traders will chase small profit margins. But, as the trader might place dozens of trades per day, these small gains can very quickly add up. Crucially, day trading is somewhat low-risk, this is because you won’t be keeping the position open long enough to encounter large losses.

Swing Trading

Swing trading cryptocurrency is more of a short-to-medium term cryptocurrency trading strategy. The trader in question might keep a position open for a few days, or even weeks. But, rarely will they hold onto a position for more than a couple of months. This particular strategy is specifically concerned with ‘catching’ a trend.

For example, if BTC/USD goes on a prolonged downward spiral, they will look to keep their short-sell position open for the duration of the trend. Then, when it appears the trend is likely to reverse, the swing trader might place a buy order to catch the upward price action.

Buy and Hold Strategy

This particular cryptocurrency trading strategy is suited for long-term investors. Known as a ‘buy and hold’ strategy, this simply means that you will be buying a digital currency like Bitcoin, and keeping hold of the coins for several years.

Buy and hold investors have little interest in short-term technical movements. Instead, they are happy to ride out volatile market waves by looking at the long-term picture.

Cryptocurrency Trading Fees

If you want to trade cryptocurrencies online, your chosen broker will charge you a fee of some sort. This can vary wildly depending on the broker in question.

The main cryptocurrency fees that you need to be aware of are:

Commissions

Much like a traditional UK forex broker, some cryptocurrency trading platforms charge trading commissions. If they do, this is charged on each and every order that you place.

Let’s take popular cryptocurrency broker Coinbase as a prime example:

  • Coinbase charges a trading commission of 1.5%
  • You decide to buy £1,000 worth of Bitcoin, so you pay a commission of £15
  • When Bitcoin is worth £2,000 you decide to cash out your gains
  • At 1.5%, this amounts to a commission of £30
  • In total, you paid £45 in trading commissions to Coinbase

Make no mistake about it – paying a commission of 1.5% to trade cryptocurrencies in the UK is considered expensive. Crucially, most of the cryptocurrency trading sites that we recommend allow you to trade without paying a single penny in commission. This includes platforms like Plus500, and even old-school platform IG!

Spreads

Spreads are often overlooked by newbie cryptocurrency traders. In a nutshell, this refers to the gap in pricing between the buy and sell price of your chosen cryptocurrency pair. You can calculate the spread in percentage terms, as this allows you to assess how competitive the market is.

For example:

  • Let’s say that you are trading XRP/USD
  • The ‘buy’ price is $25.00
  • The ‘sell’ price is $24.50
  • The difference between the two prices is 2%

In simple terms, you will need to make gains of at least 2% just to cover the spread. This is actually expensive. You should be able to get your spread down to well below 1% when using one of our suggested cryptocurrency platforms.

Other Fees

On top of the commission and spread, there are several other fees that you need to take into account.

  • Deposit/Withdrawal Fee: Some trading platforms charge fees for deposit and withdrawals, especially in the cryptocurrency scene. Coinbase, for example, charges a whopping 3.99% to deposit funds with a debit card, which is huge. Most of the platforms on this page allow you to fund your account fee-free.
  • Overnight Financing: If you decide to trade cryptocurrencies with leverage, be aware of overnight financing fees. This is charged for each full trading day that you keep your position open. You are effectively borrowing the funds from your broker.
  • Inactivity Fee: Some brokers will charge you a fee when your account is marked as dormant. This is usually after 12 months of inactivity. Once the inactivity period kicks in, you will be charged every month until you place a trade. If you don’t, your account balance will continuously be charged until the balance is zero.

To give you an idea of what fees you will pay. We’ve compared some of the most popular UK cryptocurrency trading sites, check out the comparison list below.

Crypto Broker Commission Deposit Fees Minimum Deposit Max Crypto Leverage
Coinbase 1.5% 3.99% None 1:2
Plus500 0% Free £100 1:2
FinmaxFX Varies Varies $100 1:10
IG 0% Free (0.5%-1% on credit cards) £250 1:2

Ultimately, you need to review the broker’s fee schedule before opening an account.

Cryptocurrency Trading Software

Cryptocurrency trading software is more commonly referred to as a robot, bot, or automated system. Either way, the sole purpose of the software is to buy and sell cryptocurrency pairs on your behalf. Everything is 100% automated, meaning that you can trade in a passive manner.

Cryptocurrency trading software

This is particularly useful if you have little to no experience of how cryptocurrency trading in the UK works. Similarly, robots are great if you simply don’t have the time to trade. The cryptocurrency trading software is usually backed by an advanced algorithm. It is tasked with following strict ‘what if’ conditions, and will only trade when it’s pre-built parameters are met.

In order to deploy a cryptocurrency trading robot, you will need to use a broker that supports a third-party platform like MetaTrader 4/5.

Here’s how it works:

  • First, you purchase a cryptocurrency trading robot from a verified online provider
  • Next, you download the software to your desktop device.
  • You log into MT4 with your brokerage credentials
  • Then you install the trading software into MT4
  • Finally, you adjust the settings (such as stakes, leverage, etc.) and authorize the robot to trade on your behalf

Once the robot is deployed, it will continue to scan the cryptocurrency markets on a 24/7 basis – constantly looking for trading opportunities.

Cryptocurrency Trading Signals

Although cryptocurrency trading software can be great for passive investing, it can be somewhat nerve-racking to allow a robot to enter buy and sell positions on your behalf. After all, there is always the possibility that the robot malfunctions, subsequently blowing through your entire bankroll.

With that in mind, it might be better to consider a cryptocurrency trading signal service. Put simply, the provider will have an automated robot of their own, which is also tasked with scanning the cryptocurrency markets. Then, when the algorithm identified a profit-making opportunity, it will send you a ‘signal’.

Learn 2 Trade signals

One such provider that appears to dominate the cryptocurrency signal space is that of Learn 2 Trade. The UK-based provider will send you up to 3 signals per week on its free plan. If you upgrade to a premium account (which starts at just over £14 per month), you will receive 3-5 signals per day.

Each Learn 2 Trade signal will contain the following information:

  • Cryptocurrency pair
  • Buy or sell order
  • Entry price
  • Stop-loss price
  • Take-profit price

The signal itself is sent to you in real-time via Telegram. This ensures that you do not miss the trading opportunity.

Cryptocurrency Trading Bots

Cryptocurrency bots operate much the same way as cryptocurrency trading software. You can find more information about cryptocurrency bots in the section above.

Cryptocurrency Trading Tips

Interested in trading cryptocurrencies in the UK, but not too sure where to start? Before you dive in head first, be sure to read through the following five tips.

Tip 1: Stick With Regulated Platforms

First and foremost, it is important that you only use a cryptocurrency trading platform that is regulated. Most of the platforms on this page are licensed by the FCA. This means that your funds are protected at all times. Crucially, if your chosen broker isn’t regulated, you should avoid it.

Tip 2: Only Trade Fiat-to-Crypto Pairs

If you’re a complete newbie, you are best advised to stick with fiat-to-crypto pairs. This should include the likes of BTC/USD and ETH/USD, as these two pairs dominate the vast bulk of UK cryptocurrency trading volume.

At the other end of the spectrum, you should consider avoiding crypto-cross pairs. As we discussed earlier, it is somewhat difficult to know how much you are making,  as the pair doesn’t have a fiat currency to refer to.

Tip 3: Use a Demo Trading Facility

Most of the brokers listed on this page allow you to trade via a demo account. This is 100% risk-free, as you will be trading with ‘paper funds’.

If you end up blowing your entire balance, this is a sure-fire way to know that you are not quite ready to trade with real-world capital.

Tip 4: Start With Small Stakes and Avoid Leverage

Once you are ready to upgrade to a real-money account, you should be cautious of your stake size. It’s better to keep things to a minimum, as there is every chance that you will encounter more losing trades than winning ones when first starting out.

Similarly, you should also avoid applying leverage to your trades until you are making consistent gains. After all, leverage can amplify both your profits and losses, so an unsuccessful trade can end up burning your balance in its entirety.

Tip 5: Consider Cryptocurrency Signals

If you have virtually no idea how to read or analyse charts, you likely won’t succeed as a cryptocurrency trader. This is because you won’t be able to identify pricing trends, and how these trends relate to current pricing action.

Until you learn your craft, it might be worth considering a cryptocurrency signal service. As we noted earlier, this will alleviate the need for you to perform research. Instead, this role is reserved for the algorithm backed by the signal provider.

Best Cryptocurrency Trading Platforms

In order to trade cryptocurrencies in the UK, you will need to choose a reliable trading platform. There are hundreds of providers active in the space, so you need to do some research before taking the plunge.

If you don’t have time to find a suitable broker yourself, below you will find a select of the best UK cryptocurrency trading platforms of 2024.

1. Plus500 - Low Cost Stock CFD Trading Platform

Plus500 is also popular with those that wish to trade cryptocurrencies. You can open an account from just £100, and all deposits and withdrawals are fee-free. You can do this via a debit/credit card, PayPal, or bank transfer. Plus500 supports heaps of cryptocurrencies - all in the form of CFDs. Each pair contains the US dollar, so trading volumes and spreads and typically favourable.

Plus500 allows you to trade without paying any commission. You can access the cryptocurrency trading arena via the Plus500 website or through its mobile app. All cryptocurrency pairs can be traded with leverage. This stands at 1:2 if you are a UK retail trader. Plus500 is in possession of several trading licenses, including that of the FCA.

Our Rating

  • No withdrawal fees
  • 0% trading commission
  • FCA regulated
  • No educational material
80.5% of retail investor accounts lose money when trading CFDs with this provider.

2. IG - Established Broker With MT4

IG is a trusted UK broker that offers several investment options. On top of share dealing and spread betting facilities, this also includes 17+000 CFD markets. This includes a good selection of cryptocurrency trading cryptocurrencies. For example, you can access coins such as Ethereum, Bitcoin, EOS, Stellar, NEO, Ripple, Bitcoin Cash, and more.

Spreads are very competitive, with the likes of Ethereum starting at just 1.2 pips. A stand-out feature of IG is that it allows you to trade cryptocurrencies via MT4. This opens up a world of possibilities. For example, you install a cryptocurrency trading robot and will have access to dozens of technical indicators.

Much like the other brokers on this list, you will have the option of applying leverage to your cryptocurrency trades. As you will be trading CFDs, you can also short-sell your chosen digital coin. You can easily open an account with IG from the comfort of your home, but you will need to need a minimum deposit of £250. The broker is FCA-regulated.

Our Rating

  • Spreads from 0.6 pips
  • Supports MT4 trading platform
  • Excellent research department
  • 1% fee when using Visa and 0.5% via MasterCard
  • Spreads on some crypto pairs are somewhat expensive

3. FinmaxFX - High Leverage Limits

Although FinmaxFX won't be for everyone, the offshore broker is likely to be of interest if you seek much larger leverage limits. This is because you can trade cryptocurrencies with leverage of 1:10. That is five times larger than the 1:2 cap imposed by UK brokers. As such, a £200 account balance would allow you to enter a buy/sell position worth £2,000.

FinmaxFX is also worth considering if you want to deploy cryptocurrency trading software. This is because the platform is compatible with MT5. This can be accessed via the FinmaxFX website, desktop software, or an Android/iOS app. Fees will vary at the broker, as it depends on the asset and the account type you are on.

Our Rating

  • Leverage of 1:10 on cryptocurrencies
  • Accepts most popular payment methods
  • Bonus available to new customers
  • Trading fees are somewhat high
  • Not FCA regulated
There is no guarantee you will make money with this provider.

Conclusion

In summary, cryptocurrencies operate in an ever-growing marketplace that is now home to billions of pounds worth of trading volume each and every day. The industry is now open to all UK traders – as everything is facilitated via an online trading platform.

You simply need to open an account, deposit some funds, and choose which cryptocurrency pair you wish to trade.

FAQs

How does Cryptocurrency trading work?

What is the best online cryptocurrency trading site for a beginner?

What is the best cryptocurrency trading app?

What is the best trading bot for cryptocurrency?

How do I trade Bitcoin?

Do UK cryptocurrency trading platforms offer leverage?

Kane Pepi

Kane Pepi

Kane holds academic qualifications in the finance and financial investigation fields. With a passion for all-things finance, he currently writes for a number of online publications.

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