Cryptocurrency, sometimes called crypto, is a form of currency that exists virtually and uses cryptography to secure transactions.

Instead of using banks for transactions it has a peer-to-peer system that enables anyone, anywhere to send and receive payments. This way, money is not exchanged in a physical form but exists as digital entries to an online database describing specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger and the currency is stored in a digital wallet.

Cryptocurrency received its name because it uses encryption to verify transactions. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers.

How does Cryptocurrency Trading Work?

In cryptocurrency trading you speculate on cryptocurrency price movements via a contract for difference (CFD) trading account or buying and selling the underlying coins via an exchange.

CFD trading is a type of derivative that allows you to bet on the price changes without possessing the underlying coin.

For example, you can go long (buy) if you believe the value of a cryptocurrency will rise, or short (sell) if you believe the value will fall. Both are leveraged instruments, which means that you only need a small deposit, known as margin trading crypto, to have complete exposure to the underlying market.

What is Spread in Cryptocurrency Trading?

The spread is the difference between the buy and sell prices quoted for a cryptocurrency. Like many financial markets, when you open a position on a cryptocurrency market, you’ll be presented with two prices. If you want to open a long position, you trade at the buy price, which is slightly above the market price. If you want to open a short position, you trade at the sell price which is slightly below the market price.