Trading crypto: the risks first

General information, not financial advice. Trading crypto is very high risk. You can lose money quickly, and with leverage you can lose your whole stake.

Should you trade at all?

Buying a small amount and holding it is very different from trading. If you're new, learn the basics first and don't trade with money you need. Never guess.

Trading manually

Trading yourself gives you full control. You can:

• set your own risk limits
• choose your own approach, from short-term trades to long-term holding
• react quickly to news

The downsides:

• there's a steep learning curve
• you can't watch the market 24/7
• you're prone to human mistakes and emotional decisions
• you're exposed to technical problems such as outages and dropped connections

If you do trade, learn about risk management and technical analysis first. Charting tools such as TradingView help you study price charts, and StockCharts ChartSchool explains the terminology. Only use an exchange on the FCA register.

Leverage and liquidation

Leverage means borrowing to make a bigger trade. To keep a leveraged position open you must hold a margin on the exchange. If the price moves against you and you can't meet it, you're liquidated and lose that margin. Losses can come within minutes.

Trading bots

Bots are automated tools that buy and sell for you, using your money, aiming to make a profit. They don't remove risk:

• a bot follows its rules even when markets behave in ways it wasn't built for
• you usually have to give it access to your exchange account through an API key, which is a security risk
• subscription fees and profit shares eat into any returns
• many bot services have closed or changed since this site started, and some "bots" are scams

We no longer list or recommend specific bot services. If you look at one, test it with paper trading (no real money) first, never give it withdrawal permission, and be very wary of anything promising guaranteed returns. See the warning signs.

Keep records

Every trade, including crypto-to-crypto swaps, can be a taxable disposal. See Crypto tax in the UK.