forex trading vs crypto trading

forex trading vs crypto trading
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Introduction

Forex trading and crypto trading both remain new concepts to most people. It gets even more confusing once you see that you can trade cryptos on the same sites and platforms you can trade forex. But this doesn’t come close to meaning that they are the same.

Crypto trading does involve forex trading, but only the process of buying and selling cryptocurrencies. Forex trading is a lot more than just crypto trading since there are many other things to know as well.

Forex trading vs crypto trading

There are also pros and cons that come with both crypto trading and forex trading making it hard to know forex vs crypto which is better. This article will help you to understand better in terms of why one should be preferred over the other.

What is Forex Trading

Forex trading is the buying and selling of currencies on foreign exchanges or Forex. Since the global market exists, forex trading is about taking advantage of the current exchange rates when you can make high-profit margins.

The currency exchange is not like stock markets where it includes only securities that represent ownership within a company. Instead, forex refers to all different types of actual currency being traded in real-time by investors who are looking to make quick gains while maintaining safety at the same time.

Pros and Cons of Forex Trading

Pros

a)      Volatility is the friend of the trader regardless of the direction of the flow

b)     It allows for the use of different strategies for traders to make the most of it

c)      It has a high liquidity

d)     It is not regulated by any government or agency

e)     It doesn’t require a lot of capital to start out with.

Cons

a)      There is no transparency between the brokers and traders

b)     Determining the price is not an easy process

c)      The risk is high

d)     You have to take time and learn it.

Want to Start Trading? Here is our List of Recommended Forex Brokers

Broker NameMinimum DepositSpreadsRegulationWebsite
Fx Pesa5$ 0.01CMAOpen Account
Scope Markets20$ Spreads from 1.2 CMAOpen Account
Exness10$ From 0.0 CySEC and FCA Open Account
Hot Forex5$ From 0.0 FCA, DFSA, FSCA and FSA Open Account
Pepper StoneNoneECN spreads from 0 pips for EUR/USDFCA, ASIC and DFSAOpen Account
FXTM50$ 0.1 on ECN accounts and 0.5 on Standard accounts CySEC and FSC Open Account
Table of our recommended Forex Brokers in Kenya

What is Crypto Trading?

Crypto trading is the trading of cryptocurrencies. Cryptos, also known as cryptocurrencies, refers to a digital asset that works as a medium of exchange. It is released and controlled by cryptography

forex trading vs crypto trading

It works on the decentralized peer-to-peer network which means it doesn’t have an intermediary. This allows for there to be no centralized control over crypto coins or their value and makes them immune from government interference or manipulation.

Transactions are made directly between users through the use of cryptography, hence the name cryptocurrencies. They can be obtained in exchange for fiat money, products, and services.

Because transactions are made via a distributed ledger system known as blockchain they all come with a record of their transaction history so you can easily verify their authenticity and prevent fraud.

Pros and Cons of Crypto Trading

Pros

a)      Crypto trading is open 24/7 to everyone without any geographical restrictions.

b)     The market never sleeps.

c)      No intermediary and no real-time transaction fees.

d)     You can access the cryptocurrency markets from anywhere in the world due to its global presence on the internet with a stable internet connection.

e)     Control your own wallet instead of handing it over to third parties such as banks or other centralized organizations

f)       You can be your own bank and always have full control over how much you store, who you send it to, and when you send it out.

Cons

a)      Volatility is super high.

b)     It is a new market that has very high risk and almost no regulations.

c)      There are too many altcoins, scam coins, and trading scams which makes it hard for a new investor to choose what cryptocurrency to invest in when there are thousands of different cryptocurrencies out there.

d)     Investing just $600 would have made you a millionaire if you had invested at the peak of the bitcoin price (December 2017) but investing this amount six months later would make you feel like crying if your investment didn’t double or triple up.

Similarities Between Forex Trading and Crypto Trading

Forex trading and crypto trading share a number of similarities.

1.      Decentralization

Both forex trading and crypto trading are decentralized meaning there is no governing body or the central server that controls either of these types of markets. This means they are both open to everyone with an internet connection and a basic understanding of trading opportunities without having to seek permission from anybody.

2.      They Lack Regulations

You can indeed trade from any corner of the world. Forex traders and cryptocurrency traders also don’t need to be schooled in order to learn how to make money from currencies or cryptos.

All it takes is extensive research about the market, learning the basics of which currency pairs are trending, what could influence markets, etc.

3.      Market Influence

Forex and cryptocurrency both have their own advantages and disadvantages, but one thing that they both share is an unstable market. Crypto also somewhat follows this trend where some cryptocurrencies are affected by various events around them.

In forex trading, the market is mostly influenced by countries. It’s not unusual for us to see news from a country affecting the price of its currency so much as to cause a shift in trend reaching every corner of the world within minutes.

Key Differences on Forex Trading Vs Crypto Trading

 FOREX TRADINGCRYPTO
VolatilityPrice is more volatilePrice is Less volatile
LiquidityHigh LiquidityLess Liquidity
Capital RequirementsNeeds high capital and KnowledgeLess capital and knowledge needed
AnonymityIdentity is Known Anonymous and Untraceable.
AccessibilityNo country limitationsHas limitations
forex trading vs crypto trading

1.      Volatility

The price of forex trading tends to be more volatile than the price of a cryptocurrency, with swings that can happen in a matter of minutes. Similarly, the price of cryptos may take a while before they change but when they do they change so abruptly with a big gap in between making them more volatile.

2.      Liquidity

Forex is more liquid than a cryptocurrency, which basically means that there’s more people trading and it’s easier to cash out.

3.      Capital Requirements

To begin forex trading, you’ll need enough capital to trade in the market, as well as some knowledge of how it works; however, buying crypto is relatively simple with no prior knowledge required.

4.      Anonymity

Crypto was created on the basis of it being anonymous and untraceable. This means that transactions carried with cryptos are anonymous, unlike forex. Forex doesn’t go with anonymity given that you have to create an account to trade in it.

5.      Accessibility

Forex is accessible in any country, while cryptocurrencies are accessible only if your country has a blockchain network (which very few countries have).

Final Take

Forex trading vs crypto trading has shown that both are great options of investments. On this, you can make more money with forex than with cryptos if you intend to watch the prices grow by themselves. However great market conditions can see your capital double in just a few months.

Choose the investment option that is more favorable to you. This way you will be more comfortable training with it. Now, all that is left to do is just start trading.

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