Forex Trading vs. Cryptocurrency Trading


Forex trading and Cryptocurrency Trading are completely different types of trading and belong to different markets. Spare a few minutes and read on to know the major differences between these two trading domains before choosing one for you.

Difference between Cryptocurrency Trading and Forex Trading

Bitcoin vs. Swiss Francs

The Forex trading market is huge. The average daily turnover rate in this market is in trillions. In 2016, traders had exchanged around USD 5 trillion in the Forex market. On the other hand, the most important coin in crypto, Bitcoin, had USD 1 billion traded in the same year. BTC market is not even large, like the Forex trading in the Swiss franc, which is responsible for 5% turnover, and 243 billion USD is average daily turnover. Moreover, crypto trading also shows returns of around 70%. You have never heard this high rate of return in the Forex market.

Forex trading has grown well with time and has become a mature market. This middleman in the Forex market is everywhere. From exchanges or brokers, brokers of several types, and several other costs and fees, the forex market can be expensive for you, even before you have earned profit from a dollar. This means the forex traders need to have a lot of capital before they initiate their first trade. However, smart traders do well with small investments as well.

Another aspect of the Forex market is the impact of different institutions. Unlike crypto, traders in the Forex market have to compete with high-frequency traders, different specialized firms, and established banks. This mechanism can be challenging for most of the traders.

Volatility and Stability

The Forex market has a lack of volatility, which you can see in the crypto market. This makes it hard for traders to take benefits from the small differences in exchange rates. However, traders can take advantage of easily available liquidity. This means you can easily trade in any currency for another, such as you can trade US dollars for Nigeria naira.

As the Forex has a high daily turnover, many currency pairs in the market work well, even if they are small currencies.

Forex market’s liquidity also shows that even the large traders don’t impact the price. While in crypto trading, large traders can change the prices in the market. As you have learned, crypto’s price can change the massive trades or orders, especially trades related to altcoins and lesser valuable tokens, but it has no entry problems.

You can easily start trading crypto, and various online platforms also help you get into the market and initiate your trading. The fees are also lesser than Forex fees, and you also don’t have to face the hidden cost because of the lack of a middle man. Crypto volatility also shows trades that daily large swings are common. This means it offers you to buy low in the morning and sell high profits in the evening.

Security and Regulation

There is another major difference between these two markets. This difference is about security. Cryptocurrencies are relatively new technology, which has been linked to various risks because of emerging tech. You might have heard many stories about the cryptocurrencies being stolen, hacked, or just lost due to glitches. This market has unchallengeable nature of the blockchain, which makes these actions impossible to reverse. This is a good reason to make sure you trust regulated brokers and exchange platforms for trading or holding your assets. You will find plenty of options out there when it comes to crypto, but only a few are worth considering. Among which you can find

This is a good reason to make sure you trust regulated brokers and exchange platforms for trading or holding your assets. You will find plenty of options out there when it comes to crypto, but only a few are worth considering. Among which you can find

Moreover, there are also not many regulations and rules for crypto trading. This leads to scams and fraudulent actions for which you can’t do anything. Having your funds stolen and hacked is not a good experience, and gets worse when you don’t have any way to get the money back. On the other hand, forex traders have some security level, and the respective governments typically insure brokerage accounts in the case of fraud or theft.

Which Is Better For You?

Both crypto trading and Forex trading have their own odds and evens, and their own rewards and risks. Forex trading is more protected, highly stable, and more regulated. At the same time, the crypto market offers a much larger return than the Forex. This means that experienced and smart traders will feel more attraction towards the higher profits of crypto than that of Forex trading regulations. Also, traders who don’t want to deal with the institutions will avoid jumping into the Forex market.

The two markets are only similar in a way that both are electronic trading forms of currency. The volatile nature of the crypto and the liquidity of the Forex mean that the trades will require completely different strategies for the two.

Bottom Line

Now, you may have understood the basic difference between the crypto and Forex trading. You can easily choose one of these for trading to earn profits.

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