You have to be living in a cave if you haven’t heard of cryptocurrency in the year 2022! It is a buzzword, making headlines now and then. With over 300 million crypto users and thousands of businesses accepting it as a mode of payment every other day, crypto is the future to invest in!
Today, cryptos have become the hotspot for investments. And curious beginner crypto traders leave no stone unturned in researching reliable platforms to invest in their cryptocurrencies.
This blog is your pathway to a beginner’s journey to crypto trading. Here, we have discussed some essential factors concerning different exchange platforms and walked through the best crypto exchange UK.
Best Crypto Exchanges in the UK 2022
Coinbase - User-Friendly BTC Exchange
eToro - Most Affordable Trading Platforms
Binance - Low-Cost Crypto Exchange
Coinjar - Platform For Long Term Investors
How To Start Trading Cryptocurrency?
The cryptocurrency market has been a great magnet to investors of all shapes and sizes. So much so that beginners want to get into the markets and make the most of its volatility. Unfortunately, while there’s a specific risk: reward theory applicable in the markets, the initial phases can be daunting for seasoned traders and beginners alike!
To start trading in crypto, you need to have an idea of the market, followed by a thorough knowledge of the entire movement process and the jargon involved.
First and foremost, if you want to invest in cryptocurrency, you must have all of your financial affairs in order. That involves having emergency funds, a well-diversified investment portfolio, and a sustainable debt load.
Sounds like a lot, right? Relax, we have broken the entire roadway of starting your cryptocurrency journey into bite-sized information over the six steps mentioned below:
- Open a crypto trading account
Unless you already have cryptocurrencies, you’ll need to create an account with a crypto brokerage. This trading platform would be your gateway to accessing different trades in the crypto markets.
You’ll need to provide personal identifying information to open an account with a crypto brokerage similar to your stockbroker. Some of the additional documents you’ll need to provide are your date of birth, address, Social Security number, and email address while opening the account.
Note: There may be several phases to this process, and you may have to join a waiting list to receive an account.
- Decide how you’d like to trade cryptocurrencies
There’s no specific way to trade cryptocurrencies; you need to be well versed in how you’d like to trade your cryptos. Here are the two instances of opting for a trade:
Trading cryptos using CFDs
A contract for difference (CFD) is a legal binding where you agree to swap the price difference between two cryptocurrencies while you’re opening and closing your position. Here, you speculate based on the cryptocurrency’s price rather than owning it.
For instance, if you book an extended position and the cryptocurrency grows in value, you will profit; but, if the cryptocurrency falls in value, you will lose money, and vice versa.
Buying cryptocurrencies via an exchange
Alternatively, buying cryptos via an exchange is simple! Here, you might acquire a portion of the digital currency and hold it over a digital wallet to make profits while its value increases in the future.
- Understand the basics and learn how the cryptocurrency market works
Just like any other investment, you should know precisely what you’re getting into! Analyzing your targeted crypto is by far one of the best ways to get started with the entire trading facade. Because the cryptocurrency market differs from traditional financial markets, understanding how it works and the jargon used to describe it is vital before you start investing.
While buying stocks, it is necessary to read the prospectus and conduct thorough research on the companies. Then, repeat the same for each cryptocurrency since there are hundreds of available cryptos, each with its own set of rules and new currencies being introduced every day.
The cryptocurrency market is a decentralized digital currency network, signifying that it works without a central server and relies on peer-to-peer transaction verification. Because cryptocurrencies are famously volatile, it’s crucial to know what’s likely to influence the market, ranging from initial coin offers (ICOs) to blockchain forks to breaking news and government regulation.
Before you put in your money, you must understand the investing rationale for each deal. Many cryptocurrencies lack the backing of any tangible assets or cash flow.
- Build a trading plan
While a trading plan is essential for every trader’s success, it is more critical for crypto traders! Thanks to the two-edged sword: volatility makes trading challenging while keeping the market incredibly appealing.
This is why beginner traders should always have a trading strategy in order. You should always specify whether you want to examine the market using fundamental or technical analysis in your plan. Technical analysis looks at a cryptocurrency’s price movement and historical patterns, whereas fundamental research looks at the external variables and macroeconomic data that impact the digital asset.
Whatever method you select, it’s crucial to remain up to date on any news that might affect the market since cryptocurrencies are susceptible to market sentiment. Other necessary trading elements include:
- Risk management tools.
- A description of your objectives.
- Cryptos you intend to trade.
- A process for initiating and exciting deals.
- Manage your trade risks
Managing your risk is one of the most crucial steps when it comes to beginning your journey as a trader. You must control your risk while trading any asset on a short-term basis. This concept stands true in the case of volatile assets like cryptos. As a beginner, you need to learn and manage the risks involved in the trade while developing a strategy that assists you from losing any money.
This procedure generally differs between different investors:
- For a long-term investor, risk management may simply mean holding on to crypto and never selling it, regardless of the fluctuations in price. In this case, the investor’s long-term outlook allows them to continue with their investment.
- On the contrary, a risk management strategy for a short-term trader can include identifying multiple criteria for when to exit positions, such as when an investment has lost 10% of its value. The trader then adheres to the rules to ensure that a minor loss does not become a significant future loss.
Tip: New traders might consider putting aside a particular amount of capital and spending a fraction of it in the initial stages. In such a situation, they’re still going to have money to trade in case the position goes against them.
- Open, monitor, and close your first position
You may start trading cryptocurrencies immediately after opening an account with IG and selecting your platform because you don’t need to hold a digital wallet.
No matter which cryptocurrency you want to deal with, you simply need to open the market’s deal ticket and notice the buy and sell price listed. Then, before picking buy or sell to initiate a long or short transaction, you’ll be able to specify the size of your position.
Remember, you may use stops or limits to interrupt your transaction whenever it reaches a certain threshold and protect it from unnecessary risks. Book the currency at the price which suits your strategy and desired purchase position.
Sounds easy, right? Well, trading still comes secondary! So you first need to select a crypto platform to get started with your crypto trading. And given the vast amounts of options, selecting your ideal platform might get more complex.
Besides, we needn’t tell you that your selected platform needs to suit your trade strategy and budget. So relax; we have it sorted for you. First, let’s look into some of the best crypto trading platform UK in the following section.
5 Best Crypto Trading Platforms In The UK
A crypto trading platform is your takeaway from purchasing, selling, and investing in digital currency. These services make it possible to trade cryptos for digital and fiat money. They charge a commission or transaction fee for acting as a middleman between a buyer and a seller. Here’s a look at some of the best cryptocurrency exchange UK. Let’s have a look:
Coinbase – User-Friendly BTC Exchange
Coinbase is preferably the largest crypto exchange in the world. Created in 2012, this crypto trading platform operates similarly to a classical exchange. The platform features a clean UI, allowing beginner traders to make the most of the platform. Thanks to its intuitive operations, you can easily explore several word resources situated at the top of your web page.
The platform gives plenty of information to its users, starting right from essential advice to global market news. In addition, Coinbase allows its users to trade with over 96 different cryptocurrencies in the US, representing a higher number of tradable cryptos than many other platforms.
The platform also offers 80 crypto-to-crypto trading pairs and 10+ stablecoins for its users. Talking of its regulations, the cryptocurrency isn’t protected by SIPC or FDIC; all its digital currency is insured. In terms of its fee, Coinbase charges around 0.5% for the spread for crypto purchases and sales, with fluctuating rates depending on the market conditions.
|Crypto Trading||Commision based, starting at 0.5%|
|Withdrawal||1.49%, charged to bank|
eToro – Most Affordable Trading Platforms
eToro is the perfect crypto trading platform for beginner investors! Touted to be one of the platforms with the cleanest UI, it gives you a seamless trading experience throughout. Another USP of this platform that attracts several traders is its registration fee. It allows investors to access 50+ crypto assets with low fees.
When trading over the platform, your money is safeguarded by the FSCS Scheme, thanks to the platform’s regulations by the FCA in the United Kingdom. Furthermore, the platform allows payment methods in US dollars without extra charge. However, the only charge you’ll have to pay is a 0.5 percent currency conversion cost.
eToro also stands out as one of the leading bitcoin trading platforms because its UI includes passive trading tools. The CryptoPortfolio, for example, is a diversified basket of digital currencies with varying weights. In addition, you won’t have to worry about rebalancing your portfolio as the eToro staff will manage it.
|Crypto Trading ||Spread, 0.75% for BTC |
|Inactivity ||$10 for the 13th month|
Binance – Low-Cost Crypto Exchange
When it comes to popularity and exchange size, Binance is preferably second on the list from Coinbase. Touted as the perfect crypto trading platform, Binance brings you access to many cryptocurrencies (500+) you want to deal with.
An appropriate place for new and experienced beginners, the platform endorses clean and intuitive UI, simplifying trade on many levels. In addition, the platform also offers a slew of advanced tools, allowing the traders to perform technical analyses of different coins to help investors predict the upcoming change in the price movements of different coins.
Interestingly, the regulatory features and the insurance backing Binance also make it one of the best UK crypto exchange trusted by many. Additionally, there is a lot of information to pick from in terms of lessons and videos for novices. Throughout its website, Binance, for example, explains how to buy with a credit card and swap your money based on your experience. It also explains how you may make recurring purchases throughout the company’s many channels.
|Crypto Trading ||Commision, starting at 0.1%|
|Withdrawal||0.80 EUR (SEPA bank transfer)|
Coinjar – Platform For Long Term Investors
Coinjar is another reliable global cryptocurrency platform in our list of the best crypto exchanges UK. The platform has also won numerous recognition for its beginner-friendly approach to development. A product of the Australian market, Coinjar happens to be the country’s most prominent digital currency broker. It hosts Bitcoin, among several other digital assets, for its users to buy, sell, and trade.
What makes the platform unique and more diverse for beginners is the slew of unique features to the platform. For example, CoinJar provides access to its CoinJar Bundles feature, developed especially for beginner investors. In addition, it gives you access to popular digital currency groupings, which you might consider purchasing as a whole.
This way, traders can quickly move ahead in their career with passive portfolio diversification, allowing traders to acquire different sets of cryptos at once. Besides, the 24-hour exchanges also host a full-featured Bitcoin wallet in the UK via its Android and iOS compatible app.
Coinjar – fees
|Withdrawal||Commision depending on the amount transacted|
Bitpanda is another reliable crypto trading platform that is based out of Europe. The platform has earned its name around it’s tremendously intuitive interface. It is simple and easy to use, covering many aspects, ranging from KYC verification to its trading.
Holding over 80+ cryptocurrencies in its books, the broker allows traders to trade in various assets, including stocks, cryptocurrencies, commodities, and ETFs. Among the 80+ cryptos, the platform accommodates the top 5, 10, or 25 crypto’s in terms of their market cap, allowing beginner investors to diversify their portfolios.
Additionally, the platform also comprises different tools for the users to learn. The Bitpanda academy is home to several pieces of valuable information for traders of every type.
How to Choose the Right UK Crypto Exchange for Your Needs
You can’t possibly select the best crypto exchange UK if you haven’t researched the slew of different features and functionalities. Given the numerous platforms present, choosing the suitable UK crypto exchange that suits your need is more of a matter of research.
In the sections below, we have outlined some primary factors you should consider when choosing a trading platform.
Safety & Regulation
Make no mistake: numerous unregulated crypto exchanges serve UK customers. As a result, this goes against the FCA’s advice. Any exchange to be a legal broker needs to be regulated under some governing body; otherwise, you’re at risk of losing your money.
Therefore, once you’ve created an account with your preferred exchange, move ahead with your research regarding the safety and regulation of the desired exchange. Also, check whether they’re insured or not; most crypto exchanges today are insured with the currencies they hold, both online and over storage units.
Does your crypto exchange allow you to take option trade on cryptos? This is preferably the second most important thing you should check while choosing your ideal exchange platform. Options trading in crypto is an advanced method of trade. While you might not need it currently, you can always use options trade in the future as an intermediate trader to maximize your profits.
The number of cryptos held by an exchange also proves to be a decisive factor in choosing them. Remember, the more crypto you can trade with, the better are your chances to diversify your portfolio and invest in digital assets of every class.
Crypto swapping is an essential feature for selecting your ideal exchange platform. Swapping allows you to swap the value of your crypto to another digital currency, aiding transactions over different chains and platforms. Therefore, while you’re curating a list of the top platforms you’d like to proceed with, ensure that you keep a tab on the ones which allow swapping.
Additionally, you also need to be aware of different factors like taxes, charges, deposits, withdrawal limits, and tech infrastructure, among others.
Tax On Cryptocurrency In The UK
Like many other jurisdictions, the UK has provision for HMRC (Her Majesty’s Revenue Service). However, as per the country’s taxation laws, they haven’t created new laws to tax digital assets like cryptocurrency. Instead, HMRC has, since 2018, issued several guidelines on writing off the tax around crypto and continues to modify it to date.
The UK has grouped cryptos into four different categories, which are:
- Utility Tokens
- Security Tokens
- Exchange Tokens
In 2022, the tax department has again revised some of its slabs. So in case, your profits exceed the Capital Gain Tax allowance, here’s a look at the taxes you need to pay:
|Taxable Income||Rate Of Tax|
|£0 to £12,570||0%|
|£12,571 to £50,270||Base rate - 20%|
|£50,271 to £150,000||Higher rate - 40%|
|£150,000+||Additional rate - 45% |
Best Crypto Exchange Platform In The UK
There are numerous crypto platforms out there! However, the real struggle begins when it comes to choosing one. While several factors allow you to judge which crypto exchange is the ideal fit for you, the opinion might always differ.
As per our research, our best crypto trading platform UK is eToro. The platform brings a 360–degree approach to crypto trading for users of all types. With the numerous functionalities that it has to offer, eToro makes itself a convenient fit for traders. Additionally, its FCA regulation has tight spreads on crypto trades, and low fees give it the cookie points under our inspection.
Shrey Jain is a Chartered Accountant who holds a forte in creating informative content on niches like Finance, Blockchain, crypto, and Taxation. He is a contributor on Hackernoon and Publish0x, where the audience has highly appreciated his articles. In addition, his knowledge in the finance field has helped both beginners and experts gain valuable insights into the domains of Blockchain and finance.