Forex VS Crypto Trading

By Peter Jack on The Capital

Peter Jack
The Dark Side


Forex vs Crypto

Trading cryptocurrencies or forex sounds like a great and profit-making idea these days. However, if you are a beginner, choosing between these two can be really difficult. Crypto trading is often considered similar to foreign exchange trading as forex also involves trading currencies. Although, there are a few key differences between the two.

Forex trading is large and well-established, while crypto trading is relatively new in the market. Crypto trading doesn’t require any middleman, while foreign exchange often involves middlemen, brokers, and institutions that charge fees at every step in the trading process.

Since the introduction of Bitcoin, the trading market has changed. The success of crypto traders has created a huge hype about buying and trading digital currencies. So, if you are wondering which type of trading to choose and start with, then this blog might help you. Before comparing both trading mediums for you to make the best choice, let’s take a quick look at both.

Forex Market

The Foreign Exchange Market is the largest trading market in the world. It is open 24 hours a day, 5 days a week with a daily volume of about $5 trillion. The forex market includes banks, businesses, financial institutions, retail investors, and everything that exchanges national currencies either for doing business or to make a profit.

There are several factors that can move the forex market, which may include country-specific factors like GDP, inflation, unemployment, and others. This is the reason why traders use an economic calendar to stay updated about such information and economic events that might affect the market.

Cryptocurrency Market

The cryptocurrency market was introduced in 2009 with the creation of Bitcoin. With the opening of crypto trading exchanges and the rise of various altcoins, a vast ecosystem of trading digital assets soon got formed. The Crypto market is still young (about 11 years) and operates 24 hours a day and 7 days a week.

The crypto market currently has a daily volume of about $100 billion. The trading regulations on crypto exchanges vary as different parts of the world have different rules and regulations related to cryptos. In general, crypto markets are less affected by global economic events or traditional financial markets. Traders are less involved in keeping track of headlines and are more involved in paying attention to charts and analysis.

Differences Between Forex and Crypto

  • The trades of forex are often facilitated by a broker. You can get an account that gives direct access to the market, but that is highly regulated. So, going through a broker is more straightforward for most traders and investors, but brokers take a cut. The amount of cut depends on multiple factors like the trading pair you choose, actual institutions involved, current market conditions, etc.

Cryptocurrencies are generally bought on exchanges. An exchange acts as a middleman and takes a cut. Unlike brokers, exchanges act as a single authority for buying and selling and usually have a fixed rate that always applies to trades. This simplifies the process for users as there is no negotiating, only the exchange’s terms.

  • Traditional or fiat currencies can be pegged to an asset, other currencies, or even nothing, but they are under the regulation of government and central banks. The value of global currencies depends on what commodities they produce and how their nation is doing against other global players.

Cryptocurrencies, on the other hand, were not even there a decade ago and none of them are pegged to a specific nation or bank. While they can be fixed to other assets, most of them are not. They rely on the combination of their own utility and speculative belief to derive value. The usefulness of a digital currency can vary wildly and various cryptos are coming up with multiple projects.

Which One Is Best for You?

Of course, after knowing about both markets, you must be wondering which one you should choose. Forex trading has deeper roots and clear regulations. While cryptocurrency is a new and risk-involving market. So, whether you choose to trade forex or crypto, you should know that each trading has its own risk and rewards, positive and negative sides.

People might say that forex is old and thus, is more protected, stable, and regulated. However, by trading crypto, you can get large returns as compared to forex. Both markets have some similarities such as they are electronic trading forms of currency, so you need to have a computing device and access to the internet to start trading.

Cryptocurrency is a finite asset, which makes it more desirable and high in demand. Here, the transactions are anonymous which means that the market is open for all. Look at some more benefits of trading cryptos:

  • Anonymity
  • High growth potential
  • Higher returns
  • Low barriers to entry
  • Low fees
  • Low trading costs
  • Increasing acceptance into mainstream society

If you wish to trade the leading cryptos like BTC, ETH, BCH, and others, you need to choose a reputable and reliable trading platform like PCEX Member. It is a very safe and easy platform for beginners, with advanced tools to take your trading to the next level.

The size, structure, and behavior of both markets are different. The volatility of the crypto market and liquidity of the forex market suggests that traders need to use different trading strategies for both markets. Therefore, it depends on you which one suits you best.

Seeing the recent growth of the digital asset market, many forex traders have switched to trading cryptos. So, at the end of the day, deciding to choose between trading cryptocurrency or forex depends on your goals, resources, and risk-bearing capacity. Just keep educating yourself about the trends, follow the analysis to make your trade profitable.