Crypto vs Forex Trading Compared: What Market to Choose?

Cryptocurrency or Forex (FX) trading seems like a pretty lucrative idea today. But, if you’re a budding investor, choosing between them can be a little tricky. The Forex market has been a “launching pad” with a low entry for a long time. But now, it has many competitors, such as cryptocurrency platforms and related financial instruments.

As soon as Bitcoin appeared, the trading market changed significantly. The success of many crypto traders has sparked a buzz around buying and trading digital assets. So, before making the right choice, let’s start our “crypto vs. Forex trading” battle.

What should you know about Forex and crypto trading?

Forex trading is quite popular, while crypto trading is a relatively new direction. The Crypto market does not require intermediaries, and the Forex market includes brokers and institutions that you will need to pay a commission.

What is Forex trading?

The foreign exchange market is one of the largest trading markets. FX works 24 hours a day, five days a week, with a daily volume of $ 5 trillion. Banks, financial institutions, companies, retail investors, and all organizations that exchange national currencies use it to do business and make a profit. The idea is to trade currency pairs – you buy one currency while selling another.

Of course, some factors affect the foreign exchange market. This includes specific factors such as GDP, inflation, unemployment, and more. This is one of the main reasons traders use the economic calendar to stay up to date with such information and various economic events.

What is crypto trading?

The cryptocurrency market emerged and began to develop in 2009 with the appearance of Bitcoin. The idea behind crypto trading is buying underlying coins via specialized exchanges and speculating on cryptocurrency price movements. Or you can choose a long-term crypto investing strategy.

As cryptocurrency exchanges and various altcoins started to develop, a large digital asset trading ecosystem had grown. The crypto market is relatively young (about 12 years old) and is open 24 hours a day, seven days a week.

Now the daily volume of the crypto market is approximately $ 100 billion. Trading rules on cryptocurrency exchanges are different since each country has its regulations related to trading. It is also worth noting that crypto markets are less dependent on global economic events or traditional financial markets.

Crypto and Forex: The similarities

In a nutshell, crypto and Forex trading have a lot of things in common. But the main ones are:

Money, not a real product. Of course, we can consider tokens as varieties of cash or currencies. Also, it is essential to consider that bitcoin has long become a means of accumulating capital. It has caught up with fiat currencies in most parameters.

A lot of individuals and companies are looking for either profit or resources for everyday work. There is a complete similarity here since the low entry threshold allows individuals to trade without much capital.

High technology. Devices and the internet are crucial for these markets. Even though the Forex market appeared before the advent of computers, it fully appreciated the benefits of automation. The crypto market, in this case, is one step ahead since it already exists in the digital space.

Differences between crypto and Forex trading

Despite the similarities, both markets have pretty significant differences.

Forex works with brokers. You can get an account that will guarantee direct access to the market, but this is not convenient for regular users. In this case, you will have to interact with brokers and pay them a fee for their services. The amount of payment depends on the current market conditions, currency pairs, trading participants, etc.

Cryptocurrencies are traded on centralized exchanges. In this case, you will have only one broker. Moreover, you do not need to bargain since you will immediately determine the commission. Also, all transactions are controlled by a central regulatory body, so all processes are transparent.

Forex depends on the economic and political environment. Its interaction with other currencies determines the value of a coin; the value of goods is determined by the issuing country, foreign policy interactions, and internal stability. Such currencies are regulated at the legislative level. Therefore, they are more stable and predictable.

Cryptocurrencies are self-sufficient. Of course, some digital assets are tied to real currencies or resources, but they are few. Another issue is that crypto is poorly regulated, and therefore, some countries still cannot decide if it’s money, securities, or something else.

Forex trading: pros and cons

Pros:

Constant availability. Forex traders have 24/7 access to all currency pairs with prices, charts, and even tools in real-time throughout the week (without days off).

Low cost. Forex is famous for its low ranges and extensive use of leverage to maximize trading profits.

High liquidity. Forex trading is known for its high liquidity, and it is the most accessible market to open and close positions quickly.

Cons:

Forex is not suitable for small merchant banks. This market is mainly composed of hedge funds and trading groups. Since it has a tiny percentage of movements in currency pairs, a large trading bank is more suitable for making the desired profit.

The unpredictability of volatility. Forex trading is called “legacy” because it has the same volatility (also related to political events) as the cryptocurrency market.

Crypto trading: pros and cons

Pros:

Trading 24/7. Crypto markets are always open (even weekends). This is significantly different from the Forex market, which only operates five business days a week.

Security. The cryptocurrency market provides anonymity as all transactions take place through a decentralized and encrypted system.

Fair system. Crypto transactions occur through blockchain technology. In other words, the system regulates a limited number of cryptocurrencies and the integrity of the network system.

There is no dependence on economic and political factors. In this case, everything depends on the market demand. Since this market is decentralized, supply and demand variables affect prices, and most economic and political issues have minimal impact on cryptocurrency.

Minimum costs. Since crypto traders trade on a peer-to-peer platform, you don’t need to interact with multiple intermediaries. This way, your costs will be pretty minimal.

Cons:

High volatility. Some traders like price volatility and even trade it. But some experts may argue that cryptocurrencies are overly volatile, and it takes time to find suitable entry and exit points.

Market unpredictability. Like the Forex market, the crypto market can also be unpredictable. For example, in 2017, cryptocurrency was growing, and in 2018, it fell. However, as we can see, this market is still afloat and has popularity.

Crypto vs. Forex trading: choose your market now!

The Forex market has a deep history, experience, and more precise regulation. However, the opportunities are no longer the same as in the crypto market. Moreover, you will have to work hard to find a reliable broker.

The cryptocurrency market has fewer rules but offers the chance to make huge profits. You can start with something big and more or less stable. Using our Smart Algo Automated Trading Robot, you’ll get the income you want. Trading robots aim to automate trading processes, execute all financial operations, such as opening and closing positions, and setting take-profits and stop-loss orders, all according to the accepted trading rules.

They work 24/7, constantly providing you with real-time updates and instantly making winning decisions. In addition, by analyzing historical data trading, robots correctly define the most suitable market conditions for generating profits and automatically adjust the trading strategy settings to open and close more money-making positions.

Don’t miss your chance and get the most out of your trading with us today!