Cryptocurrency VS Forex Trading: Are you looking to start currency trading, and also you might probably be looking….
“What is the difference between cryptocurrency trading and currency trading? And do you want to know which one is better?”
First, you need to know is— The foreign currency exchange (or Forex) market and the cryptocurrency market are separate from each other.
These markets have distinct factors that make them appealing to traders.
The Forex market is one of the largest, most liquid markets on earth. It’s a decentralized international market, where currencies from all over the world are traded. As a global market, the Forex is influenced by many elements, such as job reports, inflation numbers, and political announcements. And on average, approximately $5.3 trillion is traded in the Forex each day.
On the other hand, these cryptocurrencies, which are often referred to as “digital currencies,” aren’t similar to currencies like the U.S. dollar or the Chinese yuan.
While currencies in the Forex market are backed by a central government, cryptocurrencies are not. These are hosted online and backed by a peer-to-peer authentication process that discourages you from using a cryptocurrency (such as a Bitcoin or any other) more than once.
The network also develops cryptocurrencies in exchange for people working to secure the network and check the entries in exchange for digital cash. These people are known as miners.
The international cryptocurrency market has formerly reached a market cap of approximately more than $700 billion. Some experts say that number will only rise.
Cryptocurrency trading is the same as forex trading in that they both include exchanging a currency for another currency. However, the cryptocurrency market and the forex market are exploited by various factors.
The crypto market is more unexpected and volatile. For extreme foreign currency sets in the Forex, volatility is approximately 1% and 5% for the maximum currencies. For comparison, Bitcoin has a volatility of around 5% to 15%. That is why cryptocurrencies can be appealing to traders which have a high-risk tolerance.
Major features of Forex and Cryptocurrency
Very high liquidity.
Forex has more parties than any other market, so it is rapid and easy to trade even large percentages of currencies. One single investor cannot highly influence the Forex as they can do with the stock market.
Forex trading enables for leverage of 50:1, meaning you can take a Forex trading position worth $100 for only $2. But, this also means losses can escalate quickly.
As you know, the Forex market comprises of the world’s international financial markets, there is an infinite supply of currencies available to trade.
Influenced by international news, announcements, earnings reports, etc.
This can make it easier to find trading opportunities for you. Most of the traders plan for these events previously and can use techniques for essential analysis that are proven.
Available to everyone.
This enables individuals even in under-developed countries that are having no nearby banking institutions to use and trade cryptocurrencies. It also categories the field by providing investment opportunities between parties anywhere in the world.
Huge potential gains for investors.
Take this, for example, you invested $1,000 in Bitcoin in 2013 would be worth over $400,000 less than 5 years later. The opportunity for higher rewards also means larger possible risks.
Rapid and permanent transactions.
As central banking and other third-party vendors don’t take on transaction fees, cryptocurrencies have low transaction fees.
Limited supply available.
Limited supply increases the demand. As there is a cover on how many cryptocurrencies can be developed, which is uncertain, and value constantly increases. For example, with Bitcoin.
Both of the markets can have high volatility.
These are both positive and negative arguments. You know volatility is present in both the Forex and cryptocurrency markets. However, it is said the higher the risk, the higher the reward. Though cryptocurrencies tend to particularly fluctuate, both the cryptocurrency market and the Forex market can be subject to a huge difference in price in a short period.
Trading either of the cryptocurrencies or foreign currency comprises a high level of engagement. It imposes productive equity planning, adequate risk-management, determination, and a strong desire to learn continuously. However, there’s no doubt trading either of these popular markets can lead to incredible opportunities for a knowledgeable and experienced investor.