Similarity and dissimilarities between Forex and Crypto trading.
Forex Trading and Crypto trading are emerging as new profitable ways of online trading. How different are they from each other?
These days there are more than one way to make money through investing in financial markets. But one might not be acquainted with all the market-related information. Therefore, it is vital to know the market before you invest.
If you are a regular investor or trader in the finance market, cryptocurrency and forex trading must be the words you hear a lot. Yet, on the surface, although they might look similar, they are very much different from each other.
What are Crypto Trading and Forex Trading?
Cryptocurrency is yet to grow, and with every passing day, it is becoming a new trading opportunity in the world. The fundamental meaning of crypto-currency trading includes buying and selling digital assets popularly known as cryptocurrency. The different types of cryptocurrencies are Bitcoin, Litecoin, and Ethereum.
On the other hand, forex trading means buying and selling foreign currencies. This is a form of over the counter (OTC) market, intentionally decentralized for easy exchange of currency. International commerce is highly dependent on Forex trading, and the Forex trading market, which is extremely volatile in nature, takes the form of a network consisting of traders willing to buy and sell, or exchange currency pairs available globally.
Difference between Forex trading and Crypto trading
In the eyes of a beginner, Forex trading and cryptocurrency might appear very similar. Yet, they are very different from each other in terms of their market, trading, and investment. These differences include:
1. The cryptocurrency market is always open for you. It doesn’t have any time boundary while the forex exchange market is open only 5 days a week within a specific time span.
2. The forex exchange market is older, and it is the biggest online finance market in the world., while the cryptocurrency market is very new and relatively smaller than forex exchange, although it is growing very fast.
It was reported in 2019 that an average of $6.6 trillion is exchanged daily in the Forex market, which is an increase of about 29% from 2016. The crypto market, on the other hand, has a record of total trading of $256 billion.
1. Investing in the crypto market involves higher risks since it has a lower leverage. Lower leverage always includes higher risks; on the other hand, forex has lower risk and higher leverage. This is the reason many might prefer investing in the forex market.
2. The market of cryptocurrency is decentralized and comparatively new; hence it’s a bit unstable. The forex market has been there for years, and the countries they pair with for trading are quite stable.
3. In the forex market, you deal with real money that can be transferred to your bank. On the other hand, in cryptocurrency, you deal with digital coins.
4. In the Indian market, forex exchange is easier since one can open a trading account and get started, whereas investing in cryptocurrency requires a lot of knowledge and understanding of digital coins and investment.
5. In forex trading, there are middle person, brokers, and several other institutions involved in the trading, while in cryptocurrency investments, there are no middle person or any institutions which are involved.
6. The cryptocurrency market fluctuates massively in comparison to the forex exchange.
7. The crypto market is comparatively less regulated than the forex market since it’s very new and yet to grow.
Despite certain dissimilarities, they also have some similarities. For example,
1. The prices in both markets are driven by the supply and the demand curve.
2. To invest in any of the markets, one must have a clear understanding and knowledge of how they work.
3. The trading in both markets can be done online, as both of them work in online mode.
4. Both the markets are very easy to invest in once you understand the basics of them. But if you want liquid cash, forex trading is the right choice for you.
5. You have already known that the Forex market is decentralized, so is the crypto market.
Now that you know about the markets, it’s only a matter of time before you start investing in Forex trading and cryptocurrency markets. There are very wise ways to make money. Though these systems of trading and investing might require a substantial amount of knowledge of the trading grounds, these are immensely profitable and can help you grow as a trader.
If you are still confused about which market to start with, let me tell you, as you have read, both markets have different characteristics. It depends on the individual which market is suitable for them. For example, if someone is looking for a smooth and easy liquid exchange, the forex market is ideal. Similarly, someone who is interested in financial growth and has a good understanding of cryptocurrency then they can invest in the crypto market. However, one can also invest in both.