Forex and Crypto Trading

Over time, people have this idea that Forex and Crypto trading are quite similar, while some other people feel there is a wide difference between both forms of trading. Find out more about both trading markets by reading through.
Forex and Crypto Trading

The onset of trading dates back to many centuries back as different items were being traded in different countries. Then, much later, the idea of trading currencies came into play, and the forex exchange trading was birthed. This form of trading also lasted for several decades before other innovative approaches started creeping into the trading market, hence birthing crypto trading.

Crypto Landscape

The concept of Crypto trading dates as far back as 2009 when Bitcoin, the first currency was officially launched into the blockchain space. Standing as a decentralized medium for a peer-to-peer transaction, crypto has evolved from being a black market mode of payment to a globally recognized investment and trading platform. The crypto space has experienced geometric growth over the past decades with several highs and lows. Since its inceptions, there has been in the introduction of several other currencies into space by different individuals and organizations. There are also millions of crypto wallets available for crypto traders, investors and enthusiasts to make use of.

Trading and investment can go on in the crypto market. Usually, when people invest, it means they buy a currency to hold it for a long time and hope for the value to increase. This set of individuals believe more in the technology backing up that particular currency they have chosen to purchase.

This is different from crypto trading as traders buy when the price of a currency is low and sell when the price is high. Traders do not necessarily have to know or believe in the technology backing the coin they are purchasing or trading with. All that is needed is a proper study of the market with careful fundamental and technical analysis.

Crypto Landscape

Crypto trading can be done daily, and there are several exchange platforms available for traders to make use of while trading. Some other traders also prefer to trade on the longterm basis, still buying low and selling high, with no intention of investing in the cryptocurrency.

Cryptocurrency has a fixed volume in circulation, and miners in the industry control the amount going into circulation. Also, it is essential to mention the market volatility that is associated with crypto trading. Several price fluctuations happen in the market, and this can be dependent on several factors including government regulations, news and security conditions related to various currencies. In all, the crypto market is still expanding, and Bitcoin is taking the leading role.

Forex Landscape

The foreign exchange market is the largest financial market in the world. It has been like this for a long time, and it cuts across several countries around the world. This exchange is open to just anyone, could be an individual, firm or organization, all looking to make gain from different currencies. What makes the Forex seemingly easy to trade are the variety of available currencies to trade with, the low cost involved in trading and the 23 hours made available for trading per week.

The basis for forex trading is simple, but without an in-depth understanding of the market, the intending forex trader will not go far in the forex trading industry. As a forex trader, you will trade on currency pairs, meaning that you buy a currency when you believe it is in a low position and hope that it will increase over time when you will sell the currency and make your gain.

Several factors affect the forex market and the price regulation involved. Some of these include the country’s GDP, inflation rate, unemployment rate, news, such as a change in power and a lot more. Since economic events majorly affect the foreign exchange market, most forex traders make use of the economic calendar while trading.

Similarities Between Forex and Crypto Trading

  • IN-DEPTH UNDERSTANDING: Before you can engage in either forex or crypto trading, an in-depth understanding of how both platforms operate is essential. For the forex market, you need to understand how to get first-hand news and other major factors that affect the currency pairs you intend to trade with, while for the crypto market, you must also be able to do a technical analysis of the digital currency you are choosing to buy or sell.
  • SUPPLY AND DEMAND: The principle of supply and demand works for both forex and crypto market. What this means is that at a higher price, buyers will demand less and sellers will supply more and vice versa. This principle applies to every digital currency in the crypto space as well as every fiat currency in the foreign exchange market.
  • TIME AND ACCESSIBILITY: Both Forex and Crypto trading is accessible to everyone. This means that traders do not necessarily have to reach a particular status quo before they can trade in both markets. Conducting trades in the crypto market, as well as the foreign exchange market, is also fast as there are not too many processes involved. As long as you have a verified account, you can trade easily on most platforms.
  • HIGH VOLATILITY: Both markets can experience significant price fluctuations due to different factors associated with both markets.
  • DIGITAL CURRENCY TRADING: Both forex and crypto platforms involve digital trading of multiple currencies, using various platforms.
Similarities Between Forex and Crypto Trading

Differences Between Forex and Crypto Trading

FOREX TRADINGCRYPTO TRADING
Open for 24 hours in 5 days (no trading during the weekend)Open for trading all day long, throughout the week
It is quite older as it has been operational since the inventions of national currencies, hence making it more stableRelatively newer, with the first crypto in circulation in 2019, hence making it more volatile than the forex market
Smaller risks are involved with trading ForexHigher risks are involved with doing crypto trading
Central banks and different financial institutions dominate the marketIt sprung up and became popular through retail trading, hence dominated by retail traders
The daily trading volume is as high as $5 trillionThe total market cap is only about $300 billion

 Conclusion

With all of these in mind, it is evident that an in-depth understand of both markets is needed before anyone can go ahead trading on the platform. Making profits and losses are possible on both platforms, and it is possible to engage in forex trading and crypto trading at the same time.

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Education: Cass Business School Master of Science (M.S.), Shipping, Trade & Finance 2009-2011 Cass Business School Bachelor of Science (B.S.), Investment & Financial Risk Management 2005-2008

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