How to trade cryptocurrency on an exchange
To trade cryptocurrency, open a US exchange account, verify your identity, add dollars, place orders, and keep tax records. Sales and swaps are taxable.
Vahe HakobyanEditor-in-chief
Updated Oct 5, 20263 min readFact-checked
Most crypto trading happens on exchanges, but some trades happen directly between people. Compare crypto exchanges before you send money. Bitcoin transfers are recorded on the Bitcoin blockchain, where the history is public.
What you need before trading
Pick an exchange that serves US residents and review how it protects accounts. Not every exchange accepts US customers, and using one that cannot serve you can block withdrawals. US anti-money-laundering rules require these exchanges to verify who you are. US law treats bitcoin and other virtual currencies as commodities, and the CFTC enforces anti-fraud rules in cash markets.
How to trade crypto step by step
To trade cryptocurrency, use your exchange account to buy and sell digital assets. You fund the account with dollars, then place a buy or sell order.
- 1Open an exchange accountSet up your login on the exchange you chose. Use only money you can afford to lose.
- 2Fund with dollarsAdd dollars by bank transfer or wire. Ask when the funds become available to trade.
- 3Place a buy or sell orderUse a market order for the best available price now, or a limit order to name your price and wait. A limit order can stay unfilled if the market never reaches your price.
What to do after trading
Every trade and transfer leaves a record you may need at tax time. The IRS treats cryptocurrency as property, so selling, trading, or spending it usually creates a taxable gain or loss even when no dollars reach your bank. Holding coins on an exchange does not give you control of the private keys. Coins you keep off an exchange sit in a self-custody wallet, where a seed phrase controls access.
Frequently asked questions
A market order trades right away at the best available price, though it can fill in parts. A limit order names your price and can stay unfilled if the market never reaches it.
The IRS treats cryptocurrency as property, so a sale, a swap, or a purchase paid with crypto can create a taxable gain or loss. Moving coins between your own wallets is not taxable.
Exchanges that serve US residents must verify customers under anti-money-laundering rules, so a funded account needs it. Some decentralized services skip ID, but US users often cannot reach them, and tax laws still apply.
Contact exchange support and change your email and exchange passwords. If coins were taken, report it to the FBI's Internet Crime Complaint Center. Stolen crypto may not be recoverable.
