Investing in Cryptocurrency UK – How To Invest In Cryptocurrency in 2022
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Investing in digital assets in the UK is easier than ever. Whether you’re looking to invest in cryptocurrencies, speculate on the price movements or gain exposure to the crypto market with fully diversified portfolios, there are heaps of brokers, crypto exchanges, and resources available at the click of a button.
In this beginner’s guide, we cover everything you need to know to help you invest in cryptocurrency in the UK like a pro. We’ll explore all the key metrics from trading strategies and associated investment risks to the typical fees and best trading platforms to invest in cryptocurrency from the comfort of your own home.
Table of Contents
Invest in Cryptocurrency with the UK’s leading Trading Platform, eToro
Investing in Cryptocurrency UK – Tutorial
What is the best cryptocurrency to invest in? Before you can answer this question, we’ll cover everything you need to know from opening an account and depositing funds, to searching for and trading the most popular cryptocurrencies in the UK.
Step 1: Open a Cryptocurrency Trading Account
Before you can open an account you need to choose a top-rated and regulated broker that offers the cryptocurrencies you want to trade. For this tutorial we have chosen the best crypto broker in the UK – eToro.
To get started simply head over to the eToro website and create a live trading account by providing some personal information such as your name, email address, mobile phone number.
As part of the KYC process, you will be required to upload copies of your passport and a recent utility bill as proof of both your identity and address.
Step 2: Deposit Funds
eToro supports a range of payment methods for your convenience. These include debit/credit cards, bank transfer, Paypal, Skrill, Neteller. The minimum deposit is $50.
Step 3: Search for Cryptocurrencies
Use the search bar to search for your preferred digital asset, as shown in the image below. Alternatively, you can browse through the selection of supported cryptos via the ‘Trade Markets’ button located on the left-hand navigation bar of the trading terminal.
Step 4: Set Up a Cryptocurrency Trading Order
After you have chosen a cryptocurrency to invest in or trade, you’ll have to set up an order. For example, you could place a $500 buy order on BTC/EUR at the current market price.
Once you have specified the amount you want to invest you can go ahead and click ‘open trade’ to execute the order.
Investing In Cryptocurrency UK – What is it?
Cryptocurrency investing involves either speculating on the price movements of digital coins through a CFD trading account or purchasing and selling the underlying cryptos through a broker or crypto exchange.
If you want to learn how to invest in cryptocurrency as well as what the best cryptocurrency to invest in 2022 is, all you have to do is choose a trusted and top-rated crypto broker or exchange, such as eToro, and open a trading account. From there, you will need to verify your identity, deposit funds with a debit or credit card, e-wallet, or bank transfer, and you will have unfettered access to heaps of cryptocurrencies at your fingertips.
How Does Cryptocurrency Investing Work?
Trading cryptocurrencies via CFDs
CFDs trading are derivatives that allow you to speculate on the market movements of cryptocurrencies without gaining ownership of the underlying digital assets. A key benefit of CFD trading is that you can open a short (sell) position if you believe that the market price of a given cryptocurrency will drop, or you can open a long (buy) position if you forecast that the digital currency’s price will increase.
CFD derivatives are leveraged financial instruments, which means that you are only required to fork out a small deposit, also referred to as margin, to gain complete exposure to the crypto market. When it comes to using leverage, your potential profits and losses are calculated using the full value of the position meaning that leverage maximizes both returns and losses.
Buy and sell cryptocurrencies via a broker or exchange
Buying cryptocurrencies through a crypto exchange or broker involves taking ownership of the underlying asset. To get the ball rolling, you’ll have to open an exchange or brokerage account, put up the full or fraction value of the digital asset to open a trade and store the cryptocurrencies in a hot or cold bitcoin wallet until you’re set to sell for a profit.
Buying and selling cryptos via an exchange involves steep learning curves as you’ll have to familiarize yourself with the trading software and learn how to digest the data effectively. Many exchanges also have caps on the maximum deposit amount, while others charge above industry average fees for debit card deposits and trading commissions.
What are cryptocurrency pairs?
When buying and selling cryptocurrencies in the UK, you will be trading crypto pairs. Each pair will have an exchange rate, similar to how forex trading works. The fluctuation of this exchange rate is driven by supply and demand. In other words, if more traders buy a crypto pair, the price will rise. If there are more sellers than buyers, the value of the crypto pair will drop.
So, let’s examine the two types of cryptocurrency pairs that you can invest in.
1. Crypto-to-Fiat pairs
Crypto-to-fiat pairs involve one digital currency and one fiat currency. A popular example would be BTC/USD which represents the Bitcoin versus US Dollar pair. In this example, Bitcoin is the base currency and USD is the quote currency. This means that a BTC/USD price of 42,602.50 means that to invest in one Bitcoin (BTC) you need to pay 42,602.50 US Dollars (USD).
2. Crypto-cross pairs
LTC/BTC and ETH/BTC are popular examples of crypto-to-crypto pairs. Cryptocurrency pairs are digital assets that can be traded for one another on a crypto exchange. Trading crypto-cross pairs allows you to compare costs between various cryptos.
Crypto enthusiasts pay close attention to crypto-cross pairs for a couple of reasons. Certain cryptocurrencies can only be purchased with other digital assets, thus knowledge of crypto-cross pairs is paramount to being able to diversify beyond the most popular cryptos. Secondly, knowledge of crypto-to-crypto pairs equips resourceful crypto investors with the know-how to make the most of unique trading opportunities and therefore generate positive returns from differences in crypto prices between markets.
How do crypto-cross pairs work?
Crypto-cross pairs allow you to compare prices between different digital currencies on the market. These comparisons help to reveal the relative value of cryptocurrencies – for example, how much Litecoin (LTC) equals in Bitcoin (BTC). Crypto exchanges typically provide access to multiple pairing options, allowing you to select a crypto-cross pair based on your trading goals and the type of cryptos you currently own. For instance, if you already own Ethereum (ETH) you will likely be looking to trade any crypto pair on the exchange that involves Ethereum.
While some crypto exchanges do not offer trading pairs between cryptocurrencies and fiat currencies like the US dollar (USD), others, such as Gemini, Coinbase, Binance, and Kraken, do. BTC and ETH are the most popular cryptocurrency pairs to trade because they offer the highest liquidity as they have the highest market dominance of all the cryptocurrencies.
Cryptocurrency Trading Orders
After you have picked the cryptocurrency pair you want to trade, you will need to place an order with your preferred crypto exchange or broker. If you speculate that the market price will rise you need to place a buy order, and if you think that the market price will drop you need to place a sell order.
There are several other key order types that you need to be aware of when it comes to trading cryptocurrencies. For instance, if you want your long or short position to execute at the next available price you need to place a market order. On the other hand, if you want your position to be executed at a particular entry price, you need to place a limit order.
What is a Stop-Loss Order?
Stop loss orders are sale orders that are triggered when the bid price falls below a price (the stop price) that you set. This type of order could be adopted when purchasing a cryptocurrency to provide some protection and help limit your losses if the market price plummets.
What is a Take-Profit Order?
Take Profit orders help traders set a target profit price when buying and selling any type of financial asset. When the last traded price reaches the set take-profit level the take-profit order is executed instantly as a market order. Take Profit is not a mandatory order and you can place it after your position has been opened.
What Cryptocurrencies Can You Invest In?
With a crypto market dominance of 46.42% and a 24-hour trading volume above $34 billion, Bitcoin is the largest and most popular cryptocurrency on the market.
With this in mind, there are around 7,000 different cryptocurrencies in circulation. While some digital assets have market caps exceeding the billion-dollar mark, others are only worth a couple of pennies.
Most experienced traders stick with cryptos that have high liquidity and volatility; some of the most popular cryptocurrencies include:
- Dash
- Tron
- Ripple
- EOS
- Ethereum
- Ethereum Classic
- Bitcoin
- Bitcoin Cash
- Stellar
- NEO
- Cardano
- ZCash
- Binance Coin
- IOTA
- Litecoin
While the majority of crypto pairs are denominated in USD, when buying and selling Bitcoin (BTC), some exchanges also support crypto pairs denominated in GBP.
Invest in Cryptocurrency UK – What are the benefits?
On the world’s top-rated social trading platform eToro there are 16 different crypto pairs including six crypto-cross pairs such as ethereum-EOS (ETHEOS); ethereum-stellar (ETHXLM); ethereum-bitcoin (ETHBTC); bitcoin-EOS (BTCEOS); bitcoin-stellar (BTCXLM); and EOS-stellar (EOSXLM).
eToro users are increasingly interested in trading cryptocurrency pairs. But what is a crypto trading pair, exactly? Simply said, a trading pair is made up of two different types of digital assets, one of which is traded against the other — both of which can be cryptos, or one of which can be a crypto and the other a fiat currency, such as bitcoin and the US Dollar (BTC/USD).
At eToro you can either speculate on whether your preferred market price will rise or drop, without taking ownership of the underlying cryptocurrencies, or you can buy your favourite cryptos with investments as low as $25 and store your digital coins in eToro’s Money crypto wallet.
Let’s take a quick look at some of the key advantages when it comes to investing in cryptocurrencies in 2021.
Volatility
Despite the cryptocurrency market being considerably new, it has seen a lot of volatility because of vast amounts of short-term speculative interest. For example, the price of bitcoin surged to a high of $19,378 in October 2017 and sank to a low of $5,851 in October 2018. Other cryptocurrencies have been more stable in comparison, although new technology is prone to attracting speculative investments.
The volatile nature of cryptocurrencies is what makes this market so appealing to investors and crypto enthusiasts. Dramatic intraday price fluctuations offer traders a host of unique opportunities to go long and short, however, this does come with heightened risks. So, before you dive into the cryptocurrency market, you need to conduct thorough research and analysis, as well as considering your risk tolerance.
Crypto market hours allow you to trade 24/7
Since cryptocurrencies are decentralized, the cryptocurrency market is often available to trade 24 hours a day, seven days a week. Crypto transactions occur peer-to-peer between buyers and sellers on a global scale. Nevertheless, there can be brief periods of downtime while the market adjusts to important updates, otherwise referred to as ‘forks’.
High levels of liquidity
Liquidity is used to measure how easy and fast it is to exchange cryptocurrencies for other cryptocurrencies or fiat currencies without affecting the market price. Liquidity is a key element of online trading as it yields improved pricing, better transaction speeds, and heightened precision for technical analysis.
Overall, the cryptocurrency market is illiquid because the transactions are divided amongst many crypto exchanges. This means that relatively small trades can sway market prices dramatically. This is partly the reason why crypto markets are notoriously volatile.
Opportunities to go either long or short
When you invest in cryptocurrency, you are investing in the crypto market with hopes that its value will rise over time. When trading on the price of a cryptocurrency, on the other hand, you can profit from both rising and falling markets. Going short is the financial term for this type of trading strategy.
For example, let’s imagine that you opened a short CFD position on the price of Ethereum (ETH) as you speculate that the market price is going to drop. If your forecasts were accurate and the market value of Ethereum dropped against the USD, you would earn a profit. On the flip side, if the market price increased against the USD, your short position would suffer losses.
CFD trading allows you to use leverage
Since CFD trading allows you to use leverage, you can open a position with margin – a small deposit that is only a portion of the trade’s entire value. Simply put, you can gain full exposure to the cryptocurrency market with a relatively small margin.
It is important to note that while leverage can amplify your profits it can also work in the opposite direction and maximize your potential losses. This is because the profits or losses you make from cryptocurrency trading are calculated with the full value of the position when it is closed.
5 Tips to Invest in Cryptocurrency Effectively
Cryptocurrency trading involves a lot more than just opening a trading account and buying and selling digital assets regularly. You need to do your research, use technical and fundamental analysis, trading software, and trading signals to build a robust trading strategy that suits your crypto trading objectives and financial needs.
Having said this, let’s explore five of the best tips to invest in cryptocurrencies in the UK in 2022!
- Stick to regulated brokers and exchanges that offer cryptocurrency trading on a commission-free basis. With so many options out there it is important to pick an online broker or crypto exchange that is fully regulated to ensure that both your personal details and funds are protected. One of the best cryptocurrency trading platforms is eToro as it is heavily regulated by several top-tier financial institutions including the UK’s Financial Conduct Authority (FCA). Brokers that offer 0% commission trading allow you to keep your trading costs to a minimum.
- Subscribe to educational webinars and use informational content to build your knowledge of the crypto market, as well as existing and upcoming cryptocurrencies.
- Understanding charts and how to analyse the data they provide – One of the top advantages of using a long-term trading strategy such as buy-and-hold is that you do not need to pay too much attention to short-term market trends and patterns. Nevertheless, if you are interested in buying and selling cryptocurrencies via swing trading or day trading strategies you will need to analyse short-term market conditions and trends. This means that you need to have a strong understanding of how to read and interpret chart data.
- Practice makes perfect with a paper trading account – Top cryptocurrency trading platforms give you the option to practice your trading strategies via a demo account. A paper trading account mirrors live market conditions with regards to price movements, trends, volatility and more. But, the main difference is that you will be trading with virtual funds in a risk-free simulated environment.
- Passive trading – Copy the trades of other experienced traders with the click of a button via copy trading tools such as eToro’s CopyTrader and CopyPortfolio. You can browse through public profiles of hundreds of expert cryptocurrency investors on eToro and choose to copy their trading strategies. The minimum investment is just $200 and you can copy a maximum of 100 different traders at one time.
In summary, eToro is designed for beginner traders with little to no trading experience.
Best Cryptocurrency Trading Platforms of 2022
With a simple Google search you will find a plethora of UK cryptocurrency trading platforms all offering their services. But how do you choose the right provider for your trading goals? After all, you need to consider key metrics related to regulations, trading and non-trading fees, payment methods, account types, user experience, mobile trading apps, and supported crypto coins.
To help you invest in cryptocurrency UK with the best crypto trading platform in 2022, we’ve rounded up a handful of the top-rated brokers and exchanges so you can read an in-depth review of each below!
1. eToro – Overall Best Cryptocurrency Trading Platform UK
Launched in 2006, eToro is a global forex and CFD broker that also provides access to 17 popular cryptocurrencies. You can buy and sell cryptos on eToro without having to pay a penny in commission. If you are looking to speculate on the price movements of the underlying crypto market, you can access your preferred crypto pairs via CFDs. You can also use leverage of up to 2:1 and can go long or short.
eToro clients also have access to a wide range of crypto-cross pairs including BTC/BCH and BTC/ETH. When it comes to the user experience, eToro was designed with beginners in mind. Furthermore, new traders looking for a more passive approach to crypto trading can use the copy trading tools to copy the buy and sell orders of an advanced trader like-for-like.
The minimum deposit required to open an account is just $50 and you can invest in cryptocurrencies with a minimum investment of just $25. This social trading platform accepts a wide range of payment options including debit/credit cards, bank transfers, e-wallets such as PayPal, Neteller and Skrill just to name a few. eToro also offers a demo account with $100,000 of virtual funds for you to practice your cryptocurrency trading strategies in a risk-free simulated online environment. Is eToro regulated? eToro is not only regulated by the UK’s FCA, but CySEC and ASIC.
| Fee Type | Charge |
| Open an account | FREE |
| Account fee | None |
| Inactivity fee | $10/month after 12 months |
| Deposit fee | 0.5% on non-USD deposits |
| Withdrawal fee | $5 |
| Stock fees | 0% Commission |
| Crypto fees | Only trading fees charged by eToro are the spreads |
Pros
Cons
67% of retail investor accounts lose money when trading CFDs with this provider.
2. Capital.com – Best CFD Broker to Trade Heaps of Cryptocurrency CFDs Commission-Free
Capital.com is a global CFD trading platform fully regulated by the Financial Conduct Authority (FCA). Capital.com users have unfettered access to a large
Capital.com supports a commission-free trading structure as it only offers CFD derivatives. This means that the only trading fees you will need to worry about are the market-leading spreads and the overnight funding fees if you hold long positions open after the market closes. For example, you can trade the crypto-cross pair Ethereum Classic / Bitcoin (ETC/BTC) with a dynamic spread of just 0.0000110 pips, and a long position overnight fee of -0.05%, and leverage of up to 2:1.
Capital.com is regulated by top financial authorities including the UK’s Financial Conduct Authority and CySEC. In terms of client fund protections if the broker goes into insolvency, UK-based clients are covered up to £85,000, while EU-based clients are covered up to €20,000.
Depositing funds into your Capital.com brokerage account is easy and can be done with a credit/debit card, bank wire transfer, e-wallet such as Apple Pay and iDEAL. The minimum deposit is $20 for most payment options, except for wire transfers that have a minimum deposit requirement of $250.
| Commission | 0% (spreads on CFDs) |
| Deposit Fee | Free |
| Withdrawal fee | Free |
| Inactivity fees | $10 a month after 12 months of inactivity |
Pros
Cons
67% of retail investor accounts lose money when trading CFDs with this provider.
3. IG – Trusted UK Trading Platform With a Cryptocurrency Index
If you’re looking to trade options, crypto CFDs, and forex, as well as invest in stocks directly through a share dealing service, IG could be the right fit for you. IG allows you access to thousands of popular worldwide markets from the comfort of your own home, with market-leading spreads and cheap costs on share CFDs. So, could IG be the best online broker for you?
Launched in 1974, IG provides access to over 17 thousand financial markets and has become home to over 240,000 active traders. This popular CFD and forex broker allows you to make the most of unique trading opportunities through spread betting and CFD accounts. Alternatively, if you want to take ownership of the underlying assets you can invest in heaps of ETFs and shares, as well as a wealth portfolio managed by one of IG’s professional portfolio managers.
IG only allows professional traders to conduct cryptocurrency trading after the FCA banned retail clients from using crypto derivatives earlier this year. As such, experienced traders have access to popular digital coins such as Bitcoin, Ethereum, Litecoin and more.
In terms of non-trading fees these are also low as there are no deposit fees or withdrawal fees when moving money in and out of your account. IG offers some of the market’s most competitive spreads. In terms of dormant accounts, there is a £12 monthly inactivity fee per month after 2 years. When depositing funds into your account via credit card there is a 1% charge for Visa and 0.5% for Mastercard.
IG is fully regulated by a range of financial authorities such as the UK’s Financial Conduct Authority, the US Commodity Futures Trading Commission and National Futures Association, the Australian Securities and Investment Commission, the Bermuda Monetary Authority, and the Financial Services Authority of Japan.
| Commission | 0% (spreads on CFDs) |
| Deposit Fee | Free (0.5-1% on credit cards) |
| Withdrawal fee | Free |
| Inactivity fees | £12 a month after 2 years of inactivity |
Pros
Cons
67% of retail investor accounts lose money when trading CFDs with this provider.
4. Plus500 – Top-rated Commission-Free CFD Trading Platform
Plus500 is a CFD trading platform that was founded in 2008 and is fully regulated by the UK’s FCA. In 2013 Plus500 Ltd went public in the AIM section of the London Stock Exchange, and in 2018 joined the UK FTSE 250 index of leading mid-cap listed companies.
With Plus500 you can access seven financial instruments including cryptocurrencies, indices, forex, commodities, shares, options and ETFs. Plus500 only offers CFD trading which means that you do not take ownership of the underlying asset, instead, you will be speculating on the market movements of the underlying security with leverage. Plus500 traders can trade the most popular cryptocurrencies with a maximum leverage of up to 1:2 and 24/7 market availability. An important note to make here is that cryptocurrency CFDs are not available to retail clients after the FCA banned cryptocurrency CFDs on the 6th of January 2021.
Plus500 is a free trading platform that facilitates commission-free CFD trading as all the trading fees are built into the spreads. The minimum deposit is $100 for debit/credit cards and e-wallets, and $300 for bank transfers.
Funding your account on Plus500 is simple and fully digital as you can deposit money via bank transfers, e-wallets and credit/debit cards.
| Commission | 0% (spreads on CFDs) |
| Deposit Fee | Free |
| Withdrawal fee | Free |
| Inactivity fees | $10 per quarter after 3 months of inactivity |
Pros
Cons
67% of retail investor accounts lose money when trading CFDs with this provider.
5. FXCM – Top CFD Broker With Access to crypto-derivatives & spreads as low as 0.5 pips for XLM/USD
Established in 1999, FXCM is a forex and CFD broker with headquarters in the UK and is owned by Jeffries Financial Group which is listed on the NYSE under the ticker JEF with a market capitalization of over $7 billion. FXCM is a top-rated online forex and CFD trading platform that is licenced by top financial agencies such as the UK’s Financial Conduct Authority, CySEC, and ASIC.
Trading cryptocurrency CFDs on FXCM is popular with most traders as they can manage their position sizes with small contract sizes. For example, one BTC/USD CFD is equivalent to 1% of the underlying price of BTC. Furthermore, you can buy and sell popular cryptocurrencies with 2:1 leverage and speculate on the rise and drop in market prices.
When it comes to crypto CFD trading fees FXCM charges 0% commission, meaning that the only fees you have to pay are the tight spreads and overnight financing fees if you keep long positions open after the markets have closed. With that said, the typical spread for the crypto-to-fiat pair ETH/USD is 2.73 pips. With no deposit fees, you can deposit and withdraw funds to and from your FXCM live trading account via:
- Debit card and Credit card (Visa, Mastercard, Discover)
- Bank wire transfer
- Skrill payments up to $20,000 per month
- Neteller payments up to $20,000 per month
- Klarna online transfer up to $5,000 per transaction
- Rapid Transfer deposits up to £5,000 per transaction
| Commission | 0% (spreads on CFDs) |
| Deposit Fee | Free |
| Withdrawal fee | $5 |
| Inactivity fees | $50 a year after 12 months of inactivity |
Pros
Cons
67% of retail investor accounts lose money when trading CFDs with this provider.
Invest in Cryptocurrency With Trading Software
Automated trading allows you to actively participate in the crypto market without having to be permanently glued to your monitor. Algorithms are used in automated trading to buy and sell digital assets at specific times. Trades can be executed based on asset price, technical indicators, or to rebalance your portfolio.
Most automated trading software runs on an Application Programming Interface (API). Most API trading robots function as intermediaries that trade on your behalf on a separate crypto exchange.
You should consider using a cryptocurrency trading software if you want to execute your trades quickly and you want to eliminate the risk of emotional trading.
Another reason to use crypto trading software is to improve your digital asset holding diversity. Some trading software is specifically designed to hold a single digital token that trades both Ethereum and Bitcoin based on trading algorithms.
Invest in Cryptocurrency Using Trading Signals
Cryptocurrency trading signals are trading ideas created by professional investors that indicate whether you should buy or sell a certain digital asset at a certain price and time.
News, technical analysis, and the current market condition can all be used to generate cryptocurrency trading signals. A trader who chooses the right trading signal that suits his/her goals can increase their profits and optimize their trading strategy.
Telegram is the favored platform for cryptocurrency trading signals because of the huge numbers of traders that use the platform. In other words, it’s the best way to distribute a message to a large community of traders.
When it comes to signal providers, Learn 2 Trade is a popular choice amongst UK cryptocurrency traders. This is partly down to the fact that the platform has a strong presence in the signal space. Learn 2 Trade allows you to start receiving free signals with the click of a button. With Learn 2 Trade you can get:
- A maximum of 10 free, accurate and profitable signals daily
- Easily access forex as well as cryptocurrency signals
- Daily technical analysis and trading ideas
- Access to a community of more than 15,000 active traders
- Real-time notifications, all through Telegram
What are the risks of investing in cryptocurrencies?
The main risks associated with cryptocurrency investments are pegged to their high volatility, so it’s key that you have a clear understanding of what these risks are so you can plan and manage your risk tolerance.
- Volatility – Unexpected fluctuations in the crypto market sentiment can drive acute and sudden market movements. The cryptocurrency market has made a name for itself as being incredibly volatile with the value of digital assets dropping and rising by hundreds and thousands of dollars within days. The most recent occurrence of this was on May 19th 2021 when the crypto market crash drove the price of Bitcoin down by 30%.
- Decentralized Finance comes with a lack of centralized regulation – cryptocurrencies are not regulated by financial authorities or centralized governments and banks. This means that you will not be protected by any investor protection schemes. Nevertheless, as cryptocurrency projects continue to evolve and develop, more institutional investors are turning their attention to digital assets.
- Cryptocurrency exchanges are vulnerable to cyber theft and hacking.
- Crypto trading can be impacted by hard forks and discontinuation – when forks occur this can lead to significant price volatility around the infrastructure update, which can lead crypto exchanges and brokers to postpone trading throughout if there are no reliable prices from the market.
Cryptocurrency Investing Strategies
There are many ways to profit from cryptocurrency trading. Trading strategies allow you to organize those methods into a logical structure. As such you can keep track of and improve your crypto trading strategy at all times.
The two key principles you should keep in mind when creating a trading strategy are technical analysis and fundamental analysis. Since there are so many different trading strategies we’ll cover the most popular ones. So, do you want to build your trading strategy that suits your trading needs and goals? Keep reading to find out more!
Day Trading
Perhaps the most common active trading strategy, day trading involves opening and closing trades within the same day before the market closes. Therefore, day trading attempts to take advantage of intraday market volatility.
The majority of digital currency trading platforms are available around the clock, 365 days a year. When it comes to the crypto markets, day trading strategies are used differently. It usually refers to a short-term trading strategy in which traders open and close positions within a 24-hour timeframe.
Day traders often use price action and technical analysis to create trade ideas. Furthermore, they can also use various other techniques to identify unique opportunities in the crypto market.
Swing Trading
Swing trading is a trading strategy that aims to capitalize on price movements that occur in a short period. The main premise behind swing trading is to benefit from market swings that happen during a couple of days or weeks. Swing traders mainly use technical analysis to pinpoint trading opportunities. Swing traders can also use fundamental analysis, besides analysis of price trends and market patterns.
In summary, swing trading consists of holding a long or short position for more than a single trading session, but typically no longer than a couple of weeks. The main aim of swing trading is to capture the bulk of a prospective price movement. On the one hand, some swing traders prefer to trade volatile assets with frequent movement patterns, while on the other hand, some swing traders seek out safe-haven assets with less volatility. In both cases, swing trading involves locating where the price of a crypto is likely to move next, opening a position, and then capitalizing on short-term price movements.
RSI divergence trading strategy
While the RSI divergence crypto trading strategy is more technical, it may be very effective in anticipating trend reversals. When the market price begins to move in the other direction, from an uptrend to a downtrend or vice versa, this is known as a trend reversal.
The “Relative Strength Index,” or RSI, is a chart indicator that calculates the average number of gains and losses over 14 days to determine momentum. The indicator line, which oscillates between 0 and 100, can be used to show when an asset is “overbought” or “oversold”. A channel between 30 and 70 is typically used to demonstrate when a crypto is either overbought or oversold.
A crypto asset is referred to as “overbought” when the indicator line breaks out of the channel over 70, and the price will most certainly drop. When an asset breaks through the bottom of the channel below 30, it is termed “oversold,” implying that it will likely climb in price.
While this approach can be used as a simple crypto trading strategy, it can occasionally yield inaccurate outcomes. For instance, there are occasions when the RSI indicates that an asset is overbought, which is usually a buy signal, but the price continues to fall.
The RSI divergence approach is more complex than this, and it may be used to forecast when the price trend will shift. It involves comparing the asset price to the RSI indicator and looking for differences. Both the market price and the RSI typically move in the same direction. There are occasions, however, when the market price falls while the RSI rises, and vice versa.
Cryptocurrency Trading UK Fees
When you buy and sell cryptocurrencies on most cryptocurrency exchanges and brokers in the UK you will have to pay trading fees of some sort. As such, let’s explore some of the most common trading fees you are likely to encounter when investing in cryptocurrencies in the UK.
Trading Commissions
Per Side Costs are charged on a per side, per contract basis. This means that you will have to pay either a fixed or variable commission to both open and close a crypto trade. Across the board, some crypto exchanges charge a fixed rate, such as Coinbase that charges a 1.5% commission per side, while other cryptocurrency brokers such as eToro and Capital.com offer 0% commission per trade.
Spreads
What is the spread? Market spread is the difference between the bid and ask prices quoted for a tradable asset. The spread is a key component of CFD trading and spread betting, as it is how both derivative instruments are priced.
Most brokers and crypto exchanges, market makers, and other liquidity providers typically quote their prices as a spread. Consequently, this means that the buy price will be somewhat higher than the underlying market price, while the sell price will be slightly below the underlying market price.
For example,
- The current market price of BTC/USD is $45,678.00
- On Capital.com the Buy price is $45,778.80 and the Sell price is $45,653.95
- As such, the bid-ask spread for BTC/USD CFD is 110.00 or 0.27%
In other words, you would need to make a minimum return of 0.27% to break even. Professional traders seek out exchanges and crypto trading platforms that offer the lowest spreads.
What are non-trading fees?
Non-trading fees do exactly what they say on the jar; they are fees that are charged for non-trading services. Therefore, let’s take a quick look at some of the most common non-trading fees that you need to be aware of when choosing a platform to invest in cryptocurrency in 2022.
- Deposit and withdrawal fees vary depending on your chosen exchange or broker and your preferred payment method. For example, eToro does not charge any deposit fees but it does charge a fixed withdrawal fee of $5.
- Inactivity fee – most brokers charge a monthly inactivity fee after a trading account is deemed dormant. The inactivity fee typically remains in place until you place significant trading volumes or your account balance reaches zero.
Here’s a convenient trading fee table that compares the best cryptocurrency trading platforms in the UK:
| Crypto Broker Fees | Charge Per Trade | Deposit Fee | Conversion Fee |
| eToro | Free | Free | 0.50% |
| Plus500 | 0% Commission | Free | 0.50% |
| Capital.com | 0% Commission | Free | N/A |
| IG | 0% Commission | £24 per quarter (less than 3 trades) | 0.50% |
| Coinbase | 1.5% | 3.99% on debit cards | N/A |
Conclusion
You can invest in cryptocurrency in the UK with the click of a button via CFD derivatives and leverage of up to 2:1 or you can take ownership of the underlying asset and store the digital assets on a secure crypto wallet. We recommend eToro as it is not only perfect for beginner traders but it also offers copy trading tools so you can copy the trading strategies of other expert traders from the comfort of your own home and participate in the crypto market passively.
So, to get started simply follow the link below and open a live trading account with eToro to buy and sell the most popular cryptocurrencies with zero commission and tight spreads.
eToro – Best Cryptocurrency Trading Platform in the UK
67% of retail investor accounts lose money when trading CFDs with this provider.
FAQs
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