Forex is a market where currencies are traded. The currency pairs offered for trading account for about 98% of the dollar value traded, with only two other major types of currency trades making up the remaining 2%.
Forex trading is done by speculators and banks, hedge funds, and other large financial institutions. Retail traders also do forex trading through online platforms or their accounts at banks or brokerage firms.
This last type of trader will be our focus in this guide. Individual traders have decided to take a chance on cryptocurrency versus going into traditional forex trading because they think it may be more profitable in 2022 than today.
Comparison
There are many different ways to make money in the world of trading. You can trade stocks, bonds, commodities, and even forex (foreign exchange). Some people choose to do this by investing in speculative markets such as cryptocurrency. Others prefer the traditional approach with more established assets like gold or oil. Many traders prefer to trade both types of assets together to diversify their portfolios and reduce risk exposure.
There is no right answer for everyone when it comes down to choosing what type of financial instruments you should be trading with your hard-earned cash, but hopefully, by reading this guide, we can help you make an informed decision based on personal preferences.
How Does It Work?
Both forex and cryptocurrency trading is about buying and selling currencies. Both require you to trade on a platform that allows you to buy or sell currencies at any given time. And both encourage serious risk-taking in the hopes of making some money.
But because they’re so different, it’s important to know how each one works before deciding whether either is right for you.
Cryptocurrency Trading
Cryptocurrency trading is a form of trading that involves the use of cryptocurrency. Cryptocurrencies are a digital medium of exchange like money, but they have no physical form and exist only on computers. Traders buy and sell cryptocurrencies for profit, much like any other financial instrument such as stocks or bonds.
Trading cryptocurrencies can be done through many different cryptocurrency markets, including online exchanges and peer-to-peer (P2P) services. These differ from traditional stock exchanges in several ways:
- The absence of an intermediary between buyer and seller allows more flexibility in determining who pays what amount for a specific transaction.
- Trading on an exchange is often done with an intent to purchase or sell immediately after executing the order, whereas P2P platforms allow users to post offers without committing themselves.
What’s the Difference?
The main difference between Forex and cryptocurrency trading is that one is a more established market with more regulation and a wider range of assets to trade, while the other has higher volatility, lower barriers to entry, and much lower trading fees.
In summary, go for Forex if you’re after an established market with low barriers to entry but high fees on trades. If you want higher volatility in your trades along with lower fees on trades (and potentially some tax benefits), then Cryptocurrency trading might be right for you!
Forex vs. Cryptocurrency
In 2022, both forex and cryptocurrency trading will be large markets with a lot of activity. Forex is more established, but it’s also more mature, meaning the market has lower volatility and fewer assets to trade than cryptocurrencies. Cryptocurrency markets have lower trading fees and higher volatility than forex does.
Forex has been around since 1999, while Bitcoin (the first cryptocurrency) was created in 2009, so there is no question that cryptocurrencies are still very new compared to forex trading. However, they’ve gained popularity quickly over the last few years, and with good reason!
Forex Markets Are More Regulated
Forex markets are more regulated. They are regulated by the government, and all currencies involved in forex trading have to be approved by a central bank. Cryptocurrency exchanges and their native tokens don’t have such a high degree of oversight. They aren’t governed by any central authority, at least not yet.
Forex Has a Wide Range of Assets to Trade
When it comes to the world of trading, you could choose from a variety of assets. There are stock markets, commodities markets, and even futures markets. In addition to these types of traditional securities trading, there’s also Forex (foreign exchange).
The foreign exchange market is a worldwide marketplace where currencies are traded. It’s the largest market in the world and consists of over 80% of all transactions that occur on planet Earth daily!
Forex Has Lower Trading Fees
Forex trading fees are usually lower than cryptocurrency trading fees. Forex brokers charge commissions to their clients on a per-trade basis, which means that if you want to buy or sell $1 million worth of Bitcoin, the commission will be less than if you wanted to do the same with $100 worth of Ethereum.
Cryptocurrencies Have Higher Volatility
Volatility is the amount a market moves up and down. When you’re trading short-term, volatility can work to your advantage. If you are trading long-term, however, it can be very risky because it means that the price of your cryptocurrency may drop dramatically overnight.
Cryptocurrency trading can be a great way to enhance your income stream as long as risk management is a priority for you when deciding which investments to make, whether forex or cryptocurrencies!
Cryptos Have a Lower Barrier to Entering Into Trades
The cryptocurrency market has a lower barrier to entry into trading. When you trade Forex, you have to open a brokerage account and pay for the trading platform. You also need to get a trading license for yourself or your company if you want to trade CFDs on Forex.
In contrast, with cryptocurrencies such as Bitcoin and Ethereum, there is no need to open up any brokerage accounts or pay for any platforms to participate in trades.
Choose the One That Suits You Better
It’s your money, and you are responsible for everything that happens with it. If you choose to trade with one or both of them at the same time, then your decision must be based on some key factors. Your personality and trading style. The types of assets that interest you. The amount of capital available for investment.
If we look at these three aspects together, we can see how they will help us choose between Forex and cryptocurrency trading.
