EXPLAINER: 5 Key Differences Between Crypto Trading and Stock Trading


Today, most transactions take place through digital channels, where users can access different financial markets. Channels include digital exchanges, brokerage accounts, mobile apps, and other online applications.

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

The platforms offer access to 3 types of orders: 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 be executed at the limit price or lower, and a sell limit order can be executed at the limit price or higher.
  • A stop order (or stop-loss) is used to mitigate excessive losses. It is an order to buy or sell shares once the price of a security reaches a specified price, called 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, although this is expected to improve as DeFi grows. Centralized exchanges offer the full range.

But trading stocks or crypto has important differences:


Shares generally grant ownership, such as equity, to the holders. This is not always the case with cryptography. Many crypto assets are utility tokens intended for use in a blockchain-enabled ecosystem and do not represent a legal interest in the organization that issued them.

Many cryptocurrencies that do not have demonstrable use cases related to actual business operations are designed as a store of value, such as bitcoin (BTC) or stablecoins. These can be considered digital commodities, like gold, but do not represent any ownership interest in a company or its operations.

Finally, while many digital assets do not represent a legal interest in the issuing body, some 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: Short-term crypto contracts are the most profitable and easiest trading tool – says the team behind TurboXBT


Market access

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

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

Emission limits

Listed companies that issue shares may have the ability to issue new shares subject to the company’s internal regulations and any relevant local laws.

On the other hand, the total supply of a cryptocurrency is subject to the internal policies of the issuing organization or the instructions on its blockchain protocol. The supply of crypto is generally not contingent on laws or policies.

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

Using trading pairs

While stocks are typically bought and sold with fiat currencies, buying and selling cryptocurrencies can involve the use of trading pairs where two cryptocurrencies can be traded directly against 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’ll probably first need to trade the altcoin you want to trade with something more mainstream, like BTC, and then you can trade that BTC for the altcoin. wish.

Automated Market Makers (AMMs) provided by several DEXs including Uniswap, PanCakeSwap facilitate automatic execution of trades using crypto pairs they provide, simplifying the process.


Currently, crypto trading is not subject to the same regulatory scrutiny as stock trading which has been around for much longer.

Companies that issue shares are legally required to ensure transparency in their activities. This goes through :

  • Quarterly Financial Updates
  • Shareholders meetings
  • Annual Report

Equity regulators include:

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

Despite these differences, the growth of cryptocurrencies leads to the convergence of the traditional and the new. This is evidenced by the growing participation of institutional investors in crypto.


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


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