Cryptocurrencies offer an exciting opportunity to expand your portfolio into a new investment class and it’s undeniable that some investors have earned a lot of money with crypto. If you’re just getting started with investing, you might be wondering: What is crypto trading?
Asking that question and others is essential if you want to avoid some of the common pitfalls of crypto investing. Even if you’re knowledgeable about investing in stocks and other asset classes, there are some things about crypto trading that are unique and may take some time to understand.
Fiat currencies like the US dollar have been around for centuries. They’re backed by gold or some other commodity. Cryptocurrencies are decentralized and their value isn’t determined by anything except how much people are willing to pay for them.
In terms of trading, cryptocurrencies present some challenges due to their extreme volatility. Bitcoin is the world’s oldest cryptocurrency, but it’s only been around since 2009. Bitcoin’s value exceeded $100,000 for the first time in 2024 and some experts predict it could more than double in 2025.
Cryptocurrency is created (mined) on something called a blockchain. A blockchain is a decentralized ledger where transactions are unchangeable once they are executed. They’re verified using one of two consensus algorithms: Proof of Work or Proof of Stake. The world’s first blockchain was the Bitcoin blockchain, which uses Proof of Work.
So, what is cryptocurrency trading and what’s the best way to do it? Keep reading to learn important crypto terminology, what to look for in a crypto trading platform, how crypto trading works, and get our top picks for which platforms to use and how to execute successful trades.
How Is Cryptocurrency Traded?
Cryptocurrency is traded on cryptocurrency exchanges. A crypto exchange is a business that allows users to create accounts and trade crypto for other digital assets or for fiat currencies such as the US dollar or the euro. Let’s talk about how cryptocurrency is traded.
Types of Crypto Trading
Crypto trading can be done in a variety of ways, which makes it similar to trading stocks. Here are some of the most popular options.
- Day trading is a type of intra-day trading where a person buys cryptocurrency and sells it on the same day. It’s generally considered to be riskier than long-term holding, but there’s the potential for significant profits thanks to crypto’s volatility.
- Swing trading involves buying crypto and looking at trends over days or weeks – in other words, a medium timeframe. Swing traders use short-term analysis to predict trends and earn profits.
- Long-term holding (HODLing) involves holding crypto for a long time, and has a lot in common with the “buy and hold” strategy used for stocks. It requires investors to ride out crypto’s fluctuations and volatility. The term ‘HODLing’ came from a misspelling of HOLD and is often referred to as standing for Hold On (for) Dear Life.
Day trading and swing trading can be exciting, but we suggest holding off on these riskier trades until you’re comfortable with crypto trading.
Popular Methods for Crypto Trading
Crypto exchanges allow users to trade cryptocurrency for other digital assets or for fiat currencies. There are two types of exchanges you should know about.
The first is the centralized exchange or CEX, which includes well-known platforms such as Coinbase and Binance. These exchanges operate as intermediaries between crypto buyers and sellers and usually charge some fees, including both regulatory and trading fees.
A centralized exchange will typically hold the private keys to users’ crypto wallets. When you sign up to trade on a CEX, you’ll be required to go through a “Know Your Customer” (KYC) protocol, which confirms your identity and is meant to prevent the use of the exchange for crimes such as money laundering.
The second type of exchange is a decentralized exchange or DEX, which facilitates peer-to-peer trading of cryptocurrency. There’s no KYC requirement and traders retain custody of their private keys.
Decentralized exchanges offer more privacy and anonymity than centralized exchanges, while centralized exchanges are regulated and offer a bit more security.
Key Tools for Crypto Trading
You’ll need two key tools to engage in crypto trading and you have plenty of choices when you’re ready to choose your tools.
The first is a crypto wallet, or digital wallet. A wallet may be hardware or software and it’s used to store your cryptocurrency and other digital assets, including non-fungible tokens (NFTs) and smart contracts.
Wallets may be hot or cold. A hot wallet is one that’s accessible via the web. It’s inherently less secure than a cold wallet, which is a hardware wallet that’s never connected to the web. Even with a strong password and recovery phrase, hot wallets are vulnerable in a way that cold wallets are not.
The other important tool is a trading app or platform, aka a crypto exchange. We’ll get into a lot of detail about how to research and choose an exchange. It’s important to keep your security in mind.
Factors to Consider Before Choosing a Crypto Trading Platform
Here are some of the key factors to consider before you select a crypto trading platform.
Pro Tip:
Ready to enhance your crypto portfolio? Sign up for Robinhood and earn up to $1500 in free stocks by referring friends, register on Coinbase and get $50 of BTC after making your first trade, or subscribe to Interactive Brokers and get a free trial with a $1M simulated trading account!
Security Features
The first factor and one that should be prioritized is the issue of safety. Some platforms do a better job than others. Here are some security features to look for.
- End-to-end encryption
- Password protection
- Two-factor authentication (2FA)
- FDIC insurance for uninvested deposits
- Private crime insurance to protect users from hackers
- Regulatory compliance
The issue of insurance is one that looms large. Some crypto exchanges are not covered by the FDIC at all, even if users have uninvested holdings in US dollars. Some store user’s funds at offsite banks that are protected by the government.
The same is true of regulatory compliance. Many of the top crypto exchanges have had some regulatory issues, due in part to the fact that crypto is a newer asset class. One of the most common areas of debate has been with the SEC around whether cryptocurrencies are securities.
Fees and Costs
No cryptocurrency exchange is free, although some tout the fact that they offer commission-free trading. Keep in mind that commission is a fee, but not all fees are commissions. There’s a general lack of transparency around fees that can be frustrating, but fees should always be disclosed before any trade is finalized.
Here are some of the fees you should be aware of:
- Regulatory fees from FINRA and other agencies
- Blockchain fees (for example, the Bitcoin blockchain charges transaction fees)
- Trading fees (often based on a percentage of your trading volume)
- Transfer fees (outgoing wire fees, for example)
You should always read the fee schedule to make sure you understand how fees will impact your trades. For example, regulatory fees might sound scary but are usually only a fraction of a penny.
Supported Cryptocurrencies
The number of cryptocurrencies available for trading can vary greatly from exchange to exchange. You’ll need to think about which cryptocurrencies you want to trade. Bitcoin is available on most platforms. Here are a few examples of what you can expect to find.
- Robinhood has 20 cryptocurrencies available to trade with plans to add more in the future.
- Coinbase has over 260 cryptocurrencies and 300 trading pairs.
- Binance offers more than 500 cryptocurrencies to trade.
We suggest finding an exchange that offers a mix of well-known cryptocurrencies (think Bitcoin and Ethereum), altcoins (Dogecoin or Solana), and stable coins like USDC.
Ease of Use
Finally, you’ll want to consider how easy an exchange is to use. As a rule, centralized exchanges are more geared toward beginners and tend to have more user-friendly interfaces than decentralized exchanges.
If you’re a beginner, you may prefer a streamlined trading process like the one offered by Robinhood, which has a well-reviewed mobile app where you can initiate and complete a trade with just a few clicks.
More experienced investors may not mind a more complex platform, particularly since these tend to offer more data and analysis options.
Pro Tip:
Ready to enhance your crypto portfolio? Sign up for Robinhood and earn up to $1500 in free stocks by referring friends, register on Coinbase and get $50 of BTC after making your first trade, or subscribe to Interactive Brokers and get a free trial with a $1M simulated trading account!
Best Cryptocurrency Trading Platforms in 2025
Now, let’s get into which is the best cryptocurrency trading platform in 2025.
Beginners may prefer a streamlined app such as Robinhood, which offers a limited number of cryptocurrencies. The interface is user-friendly and designed to democratize the process of stock and crypto trading. It’s also useful because beginners can build a (somewhat) diversified portfolio that includes stocks, ETFs, and cryptocurrencies.
People who want a huge array of cryptocurrencies and trading pairs may prefer Coinbase. Its interface is more complex, but not so complicated that a beginner couldn’t understand it with a bit of time and effort. The downside is that it’s a crypto-only platform and anyone who’s building a portfolio would need to use a different platform to buy other asset classes.
Both Kraken and Crypto.com offer lower-than-average fees and a wide array of cryptocurrencies available to trade. Fees can be a major issue when you’re just starting out, so you may want to choose an exchange that will save you some money.
If you’re looking for true diversification and an all-in-one platform for investing, then Interactive Brokers is our pick. Their fees are a bit higher than most crypto-only exchanges, but in return, you can trade stocks, bonds, ETFs, mutual funds, futures, Forex, and more.
Finally, if you’re interested in a decentralized exchange, our top pick is Binance, which offers a ton of crypto trading options and real privacy.
Here’s our chart to help you compare features to find the best cryptocurrency exchange platform for your needs..
| Robinhood | Coinbase | Crypto.com | Kraken | Interactive Brokers | Binance | |
| Available coins | 20 | 360 | 311 | 300+ | 4 | 500 |
| Security | Passwords, 2FA, encryption, cold storage | Passwords 2FA, encryption, cold storage | Zero Trust policy includes passwords, 2FA, and encryption | 2FA, state-of-the-art encryption, cold storage | Passwords, 2FA, around-the-clock monitoring, SSL encryption | Passwords, 2FA, cold storage, IP address whitelisting |
| Trades | HODL, day trades | Day trades, market orders, limit orders and more | Stop-loss limit, stop-loss market, take-profit limit, take-profit market, and more | Limit orders, market orders, stop-loss orders, trailing stop orders, etc. | Stop-loss limit, stop-limit, trailing stop, and many others. Full list here. | Spot trading, stop-loss, stop-limit, options, futures, margin trading, and more. |
| Fees | Regulatory, trading fees, wire fees. Read details here. | Regulatory, trading fees, spread. Full details here. | Crypto.com has a complex fee structure. Read the details on their website. | Maker/taker fees, 20% for staking; view details here. | .08 to 0.20 basis points per trade; read the full details here. | Trading fees based on 30-day volume, up to 35% on staking, read details here. |
Pro Tip:
Ready to enhance your crypto portfolio? Sign up for Robinhood and earn up to $1500 in free stocks by referring friends, register on Coinbase and get $50 of BTC after making your first trade, or subscribe to Interactive Brokers and get a free trial with a $1M simulated trading account!
Tips for Successful Cryptocurrency Trading
Here are our best tips for successful cryptocurrency trading.
- Start with small investments to minimize your risk. At the beginning, you shouldn’t initiate any trade that involves more money than you can afford to lose.
- Be prepared for volatility. Cryptocurrencies (as a rule) are far more volatile and risky than stocks, ETFs, bonds, or mutual funds. HODLing is a good strategy because many cryptocurrencies have an overall upward trend, so it’s important not to panic when there’s a drop in the price.
- Diversify your portfolio among multiple cryptocurrencies. Just as you would with stocks and other investment classes, don’t put all your eggs in one basket. If one cryptocurrency crashes, another may be on the upswing.
- Research cryptocurrencies before you buy them. While it’s undeniable that Bitcoin had a huge year in 2024, there are no guarantees that its performance will continue. We always recommend being as knowledgeable as possible about any investment before you make it.
- Stay updated on market trends and news. Subscribing to online crypto websites and publications can help you avoid being surprised. Examples of well-regarded crypto news sources include Coindesk, U.Today, and Decrypt.
- Make sure to secure your holdings. As we’ve already stated, we strongly suggest using a cold wallet. It’s the best way to protect yourself against hackers.
- Never share your crypto wallet or exchange login information with anybody else. While some exchanges carry private crime insurance, that won’t protect you if you compromise your own security by giving out your information.
- Keep your recovery phrase stored somewhere that nobody can get it. We recommend writing it down on a piece of paper that you then put in a waterproof and fireproof lockbox, or in a safe deposit box at your bank or credit union.
- Educate yourself about crypto scams. Some examples include phishing, where a scammer sends you a scary-sounding text or email asking you to click a link to login. Others include fake Initial Coin Offerings (ICOs) and Ponzi schemes. One key element of the last two scams is an offer that sounds too good to be true.
- Don’t engage in day trading or swing trading, or any other type of speculative trade, until you’ve spent some time trading cryptocurrency and you’re familiar with the process.
Using these tips can help you avoid some of the most common risks of crypto trading and maximize the chances that you’ll earn a profit.
Conclusion
Finding the right cryptocurrency exchange isn’t difficult, but you will need to spend some time figuring out which one is best suited to your needs.
Robinhood is best for beginners who want to get their feet wet in cryptocurrency trading and don’t need a lot of bells and whistles. We suggest Coinbase for serious crypto traders who want advanced charting and access to hundreds of coins and trading pairs.
Crypto.com and Kraken are ideal for people who want to save some money on fees, while Binance is the option for those who want a decentralized exchange.
Finally, we recommend Interactive Brokers for people who are searching for an all-in-one exchange to create a balanced portfolio.
Choosing the right exchange for your preferences and following our tips for successful trading will help you add crypto to your portfolio without taking unnecessary risks.
FAQs
The best trading platform depends on your specific needs and preferences. Beginners will do well with Robinhood’s user-friendly interface, while more advanced traders should look at analysis options and trading options to choose the platform that’s right for them.
The best crypto for beginners would be either a well-known and established coin such as Bitcoin and Ethereum, or stable coins such as USDC. Most of the platforms we’ve listed here allow users to buy fractional shares, which are a good way to get started without risking more than you can afford to lose.
Cryptocurrencies are more popular than ever, and adding some crypto holdings to your portfolio can be a good way to diversify and protect yourself. Most experts recommend keeping your crypto holdings to 10% or less of your total portfolio to minimize risks associated with volatility.
