Cryptocurrency Trading vs. Forex Trading: Is It Real Or a Scam?
Cryptocurrency trading vs. forex trading has always been a debate even among advanced traders. That’s because it’s hard to differentiate which one of the two is more profitable than the other. So, in this article, we are going to discuss cryptocurrency trading vs. forex trading. But before we get to the topic of discussion, let me give you a short description of cryptocurrency trading and forex trading.
Cryptocurrency trading definition: cryptocurrency trading is typically buying and selling digital assets on an exchange. Also, it involves speculating the price of a certain crypto-coin using a CFD trading account.
Forex trading definition: forex trading is trading two currencies against each other. If you speculate that one currency will be stronger than the other and you are correct, you will profit from your prediction.
Cryptocurrency trading vs. Forex trading: Similarities
Cryptocurrency trading vs. Forex trading has a few similarities that are worth noting down. They include:
- You need to have a good understanding of the market to trade on cryptocurrency or forex. That means both trading platforms will require you to study.
- In both markets, the price of the pairs is determined by the supply and demand of the coins.
- Both trading markets are now easy to access. What’s more, trading of both markets is done online, so any computer or smartphone with internet access can be used for trading.
- There is high volatility in both markets. That means there’s a change in price within a short period; hence traders can profit from that.
- It would help if you were prepared mentally to deal with the losses in both trades. That’s because there are psychological risks when you lose in both markets.
Cryptocurrency trading vs. Forex trading: differences
- Cryptocurrency trading is open 24/7, while forex trading only happens from Monday to Friday and closes on the weekends.
- The cryptocurrency market has only been around for a few years; hence it’s relatively new. On the other hand, forex trading started since the beginning of national currencies.
- The level of risk in cryptocurrency is higher compared to forex trading.
- Cryptocurrency has no assurance of a definite pay-off, while institutional players and banks mostly dominate forex trading.
- The crypto-market is highly dependent on your location. That means, depending on the location you are in, you might not be able to use your profits. The forex market is dependent on time. Many factors of the economy might affect your trade.
Cryptocurrency trading vs. forex trading: which one should I choose?
The end goal of any trader is to profit with the knowledge they have on the market. And sure enough, both of these markets will earn you a substantial amount of profit. But that’s after you’ve learned the game. Like I said earlier, you will need to have a proper grasp of the market even to start trading with these markets.
All in all, every investment opportunity carries its own set of risks and benefits. The cryptocurrency market and forex market are not all that different. With the proper tools and knowledge, you will be able to trade with good profit potential.