EXPLAINER: 5 Key Differences Between Crypto Trading and Stock Trading

Today most trading takes place across digital channels, where users can access different financial markets. The channels include digital exchanges, brokerage accounts, mobile apps, and other online applications.

As such, the digital experience between crypto and stock trading is usually similar. The platforms for crypto or stock typically have the same layout, order-book based liquidity mechanisms, and trading options.

The platforms offer access to the 3 order types: market, limit, and stop:

  • A market order is an order to buy or sell an asset as soon as possible at (or near) the current bid (for a sell order) or ask (for a buy order) price. A market order guarantees that the order will be executed but does not guarantee the price.
  • A limit order is designed to buy or sell an asset at a specific price – or better if possible. A buy limit order can execute at the limit price or lower, and a sell limit order can execute at the limit price or higher
  • stop (or stop-loss) order is used to mitigate excessive losses. It is an order to buy or sell a stock once the price of a security reaches a specified price, known as the stop price. When the stop price is reached, a stop order becomes a market order

For crypto, most decentralized exchanges only offer market orders at the moment, though it is expected that this will improve as DeFi grows. Centralized exhanges offer the full range.

But trading of stocks or crypto has some significant differences:


Stocks typically grant ownership such as equity to the holders. That’s not always the case with crypto. Many crypto assets are utility tokens that are meant to be used within a blockchain-enabled ecosystem and do not represent a legal stake in the organization that issued them.

Many cryptocurrencies that do not have demonstrable use cases tied to actual business operations are intended as a store of value, like bitcoin (BTC) or stablecoins. These can be thought of as digital commodities, like gold, but do not represent any stake in a business or its operations.

Lastly, while many digital assets do not represent a legal stake in the issuing organization, certain types of crypto security tokens are actually designed to act like stocks. They represent an equity stake in an issuing company in addition to having other programmable characteristics.

In many jurisdictions, these tokens are subject to the same regulatory requirements as securities.


SEE ALSO: Crypto Short-term Contracts are the Most Profitable and Straightforward Trading Tool – Says Team Behind TurboXBT


Market Access

A key difference between crypto and stock is the period in a day when users can access the market. Stock trading is generally limited to business hours for example between 9:30 in the morning and 4:30 later in the day.

Crypto markets, however, never close, even on holidays. This makes it easier for people to take new positions and enter, or exit, the market whenever they want, regardless of where they live.

Issuance Limits

Publicly-traded companies that issue stocks may have the option to issue new shares subject to the company’s internal regulations and any relevant local laws.

On the other hand, a cryptocurrency’s total supply is subject to the issuing organization’s internal policies or the instructions on its blockchain protocol. Crypto supply is usually not contingent on laws or policies.

Furthermore, crypto projects can easily and transparently set hard caps on their total cryptocurrency supply in a way that is provable and unalterable.

Use of Trading Pairs

Whereas stocks are typically purchased and sold with fiat currencies, buying and selling cryptocurrencies may involve the use of trading pairs where two cryptocurrencies can be directly exchanged for each other.

Since bitcoin (BTC) and ether (ETH) are 2 of the most commonly traded cryptocurrencies, most trading pairs involve one of these crypto assets.

As such, if you want to trade one altcoin for another, you will likely need to first exchange the altcoin you want to trade with something more common, like BTC, and then you can exchange that BTC for your desired altcoin.

Automated market makers (AMMs) provided by several DEXs, including Uniswap, PanCakeSwap, make it easy to atuomatically execute trades using crypto pairs that they provide thus simplifying the process.


As of now, crypto trading is not subjected to the same regulatory scrutiny as stock trading which has existed for a much longer time.

Companies that issue stocks are legally required to provide transparency about the activities. This happens through:

  • Quarterly financial updates
  • Shareholder meetings
  • Annual reports

Regulatory bodies for stocks include:

  • Securities and Exchange Commission (SEC)
  • Federal Deposit Insurance Corporation (FDIC)
  • Financial Industry Regulatory Authority (FINRA)

Despite these differences, the growth of cryptocurrencies is leading towards the convergence of the traditional and the new. This is highlighted by the growing participation of institutional investors into crypto.


RECOMMENDED READING: An Introductory Guide into Quantitative / Algorithmic Trading in Crypto


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