How to trade crypto
Written by an ex-institutional trader. How to trade cryptocurrency in Australia: the two routes (owning coins on an exchange versus trading the price with CFDs), how going long and short works (shown with a diagram), leverage, the ASIC rules, and how to start.
Direct answer
There are two ways to trade crypto: own the coin by buying it on an exchange (spot), or trade the price movement with a CFD (contract for difference) without owning the coin. Owning suits long-term investing; you hold the actual Bitcoin or Ethereum and profit if it rises. Trading CFDs suits short-term, active trading: you use leverage, you can profit from falling prices by going short, and you never hold a coin or a wallet.
In Australia both are legal and regulated. Spot crypto trades through AUSTRAC-registered exchanges; crypto CFDs trade through ASIC-regulated brokers, with leverage capped at 2:1, the lowest of any asset class because crypto is so volatile. The honest warning applies throughout: crypto is extremely volatile, leverage magnifies losses, and most retail CFD accounts lose money. Whichever route you take, start small and only risk money you can afford to lose.
The two ways to trade crypto
There are two fundamentally different ways to trade cryptocurrency, and choosing between them is the first decision.
- Own the coin (spot). You buy actual Bitcoin or Ethereum on an exchange and hold it, profiting if the price rises. You own the asset, can hold it indefinitely, and can move it to a wallet. This suits long-term investing, and it is covered in the crypto exchange guides.
- Trade the price (CFD). You trade a contract for difference through a regulated broker, without owning the coin. You can use leverage, and you can profit from falling prices by going short. This suits short-term, active trading.
The word "trade" usually points to the second route: actively buying and selling to profit from price moves, in both directions, rather than buying to hold. The rest of this guide focuses on that active trading, while being clear that owning the coin is the better route for long-term investing.
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Going long and short
Active crypto trading, through CFDs, lets you profit in both directions, which is the key difference from simply owning a coin.
- Going long means buying because you expect the price to rise. Both owning the coin and a long CFD profit here.
- Going short means selling first because you expect the price to fall. Only a CFD makes this straightforward, because you never own the coin. It is one of the main reasons active traders use crypto CFDs rather than spot.
Being able to profit in falling markets, as well as rising ones, is a defining feature of CFD trading. The trade-off is that leverage and two-way exposure make losses arrive just as easily as gains.
Leverage and the ASIC cap
A crypto CFD is leveraged: you put up a fraction of the position's value as margin and the broker funds the rest. This magnifies both gains and losses relative to your deposit, which is powerful and dangerous in equal measure given how volatile crypto is.
Because of that volatility, ASIC caps retail crypto CFD leverage at 2:1, the lowest of any asset class. For comparison, major forex pairs are capped at 30:1. The low cap is a deliberate protection: at higher leverage, a normal crypto swing would wipe accounts out routinely. Even at 2:1, crypto CFDs are high-risk, and a stop loss on every trade with small position sizing is essential.
Trading crypto in Australia
Both routes are legal and regulated in Australia, under different regulators:
- Spot crypto trades through AUSTRAC-registered exchanges, where you buy and own the coin. Profits are usually taxed as capital gains, with the 50 percent discount available if held 12 or more months.
- Crypto CFDs trade through ASIC-regulated brokers, with the 2:1 leverage cap, negative balance protection and segregated funds. CFD profits are taxed as ordinary income, because you never own an underlying asset.
The tax difference is significant and follows from ownership: own the coin and you are in the CGT system; trade a CFD and the profit is ordinary income. The full detail, including the ASIC-regulated brokers offering crypto CFDs, is in the crypto CFD trading in Australia guide.
How to start
If you want to trade crypto actively (CFDs), a sensible order is:
- Learn the fundamentals. Understand what a CFD is, leverage, margin and the stop loss before risking money.
- Practise on a demo account. Trade virtual money to learn the platform and test an approach at no risk.
- Choose an ASIC-regulated broker. Plus500, Pepperstone and AvaTrade offer crypto CFDs to Australians. Compare them in the crypto CFD trading guide.
- Start small and manage risk. Risk a small fixed percentage per trade, sized with the position size calculator, and only use money you can afford to lose.
If your goal is long-term holding rather than active trading, owning the coin on an exchange is the better route; see the best crypto exchanges in Australia guide instead.
ASIC-regulated brokers offering crypto CFDs
All three are ASIC-regulated with free demo accounts. CFD Service. Your capital is at risk.
Examples are illustrative. Crypto is extremely volatile. Last reviewed: 2026-06-02.
Frequently asked questions
How do you trade cryptocurrency?
There are two main ways. The first is to buy and own the coin on a crypto exchange (spot trading), holding the actual Bitcoin or Ethereum and profiting if its price rises. The second is to trade the price with a CFD (contract for difference) through a regulated broker, without owning the coin: this lets you use leverage and profit from falling prices by going short, but it is built for short-term trading. Owning suits investing; CFDs suit active trading. Both are legal in Australia through regulated providers.
What is the difference between trading and investing in crypto?
Investing in crypto usually means buying and holding the actual coin for the long term, expecting its value to grow over months or years. Trading means trying to profit from shorter-term price movements, often using CFDs that let you go long or short with leverage without owning the coin. Investors care about long-term value and hold through volatility; traders care about price moves and use stops and position sizing to manage frequent, leveraged risk. They are different activities with different tools, time horizons and tax treatment.
Can you trade crypto without owning it?
Yes. A crypto CFD lets you trade the price of Bitcoin, Ethereum or other coins without ever owning the cryptocurrency or holding a wallet. You are entering a contract with a broker to exchange the difference in the price between opening and closing the trade, settled in cash. This is how you can go short, profiting when the price falls, and use leverage, neither of which is straightforward when you own the coin outright. It is a fundamentally different product from buying crypto on an exchange.
Is crypto trading legal in Australia?
Yes. Buying and owning crypto trades through AUSTRAC-registered exchanges, and trading crypto CFDs is legal through brokers holding an Australian Financial Services Licence from ASIC. ASIC regulates crypto CFDs with consumer protections including a 2:1 leverage cap (the lowest of any asset class), negative balance protection, and segregated funds. Both routes are legal for Australian residents; the key is using a properly regulated provider rather than an unlicensed offshore platform.
How much money do you need to start trading crypto?
Less than most people expect, but the important rule is to start with only what you can afford to lose, because crypto is extremely volatile. Spot exchanges often let you buy small amounts, and CFD brokers let you trade small position sizes. For CFD trading, sizing risk sensibly at 1 to 2 percent per trade means most beginners want at least a few hundred dollars. Practise on a free demo account first, and treat early trading as learning rather than a way to make money.
Can you short crypto in Australia?
Yes, through crypto CFDs with an ASIC-regulated broker. Going short means selling first to profit if the price falls, which is straightforward with a CFD because you never own the coin. You cannot easily short crypto you own on a spot exchange; shorting is one of the main reasons active traders use CFDs. ASIC caps crypto CFD leverage at 2:1, and shorting carries the same volatility risk as going long, so a stop loss and small position sizing are essential.
