is bitcoin trading like stock trading, forex, someone in middle or neither?

[empoweoqwj]

I'm a noob trader, and just trying to get to grips with all the concepts involved.

Can experienced traders provide some insight into how they see bitcoin trading, whether it more like stock trading or forex, it would be very interesting. If this has been discussed before, apologies.

tia

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[monsterer]

I'm a noob trader, and just trying to get to grips with all the concepts involved.

Can experienced traders provide some insight into how they see bitcoin trading, whether it more like stock trading or forex, it would be very interesting. If this has been discussed before, apologies.

tia

Bitcoin is more like stock trading than forex, simply because with bitcoin/stocks you actually end up owning the asset in question. With forex you never own the quote currency, since every buy must be closed with a sell and visa versa.

An advantage you have with bitcoin over stocks is that you get to deal directly with the exchange itself, rather than going through a broker.

Bitcoin exchanges don't bet against you or want you to lose your trades (unlike in forex) because you take on the risk when buying bitcoin, not the exchange.

Hope that helps

Cheers, Paul.

[empoweoqwj]

I'm a noob trader, and just trying to get to grips with all the concepts involved.

Can experienced traders provide some insight into how they see bitcoin trading, whether it more like stock trading or forex, it would be very interesting. If this has been discussed before, apologies.

tia

Bitcoin is more like stock trading than forex, simply because with bitcoin/stocks you actually end up owning the asset in question. With forex you never own the quote currency, since every buy must be closed with a sell and visa versa.

An advantage you have with bitcoin over stocks is that you get to deal directly with the exchange itself, rather than going through a broker.

Bitcoin exchanges don't bet against you or want you to lose your trades (unlike in forex) because you take on the risk when buying bitcoin, not the exchange.

Hope that helps

Cheers, Paul.

Thanks Paul. Great answer. Now you mention the word "asset", it makes me think of gold. Perhaps bitcoin trading is more like trading commodities then? Or would you still say its more like stock trading than commodity trading?

I just have a hard time thinking of bitcoins as a "stock" because in the books I've read, it talks about "getting into positions" with stock picks, and then getting out again to cash to (hopefully) increase equity.

But I already view bitcoins as currency (?!?), hence my confusion as to what asset class I am attempting to trade, and what kind of books I should be reading. Perhaps its a bit of a few worlds.

[monsterer]

Thanks Paul. Great answer. Now you mention the word "asset", it makes me think of gold. Perhaps bitcoin trading is more like trading commodities then? Or would you still say its more like stock trading than commodity trading?

I just have a hard time thinking of bitcoins as a "stock" because in the books I've read, it talks about "getting into positions" with stock picks, and then getting out again to cash to (hopefully) increase equity.

But I already view bitcoins as currency (?!?), hence my confusion as to what asset class I am attempting to trade, and what kind of books I should be reading. Perhaps its a bit of a few worlds.

I use the word 'asset' only for want of a more generic term to describe anything which you can actually own and holds value.

Getting in and getting out makes sense in bitcoin as well if you're talking about buying - makes less sense when you're talking about selling since you can't really short bitcoin in the same way you can't short apples or oranges - you'd need an inverted market to be able to do so, or a market in which you never really owned the asset in the first place, like forex.

Bitcoin is a currency, so its a little confusing that *retail* forex trading doesn't work the same way - trading forex as a bank, or large financial institution works exactly the same way as bitcoin, since banks and institutions actually end up owning the other currency they're trading with.

In a way, trading bitcoin is a huge privilege because there isn't a way joe public (that I know of) can actually trade forex in the same way and own the quote currency - joe public trading bitcoin gets the opportunity to trade like a bank would.

Cheers, Paul.

[stslimited]

trading bitcoin stocks (ASICminer) is like stock trading

trading bitcoin currency is like currency trading


obvi

[monsterer]

trading bitcoin currency is like currency trading

Not really. In retail forex you never own the quote currency, making it quite different from bitcoin trading.

[empoweoqwj]

So with retail forex "trading" you don't get to own the currency, plus I've read you automatically get leverage up to 200:1, there are no brokerage fees, the brokers/banks make their money through the large spreads.

Which doesn't sound much like bitcoin trading at all. Sounds more like you are just betting on which way currency pairs will go, and the "bookmaker" makes money directly off all the retail traders through the spread. (And the leverage is there to get the money back quicker from the punters?!?)

OK, now I understand why trading btc looked more like stock trading than (retail) forex trading. And I don't think I'll get into forex 

[monsterer]

So with retail forex "trading" you don't get to own the currency, plus I've read you automatically get leverage up to 200:1, there are no brokerage fees, the brokers/banks make their money through the large spreads.

Which doesn't sound much like bitcoin trading at all. Sounds more like you are just betting on which way currency pairs will go, and the "bookmaker" makes money directly off all the retail traders through the spread. (And the leverage is there to get the money back quicker from the punters?!?)

That's fairly accurate - although their model for fees is much better than the bitcoin exchanges IMO... And it should be noted that some brokers are better than others. What you've described is the worst case forex broker, but to some degree they're all alike.

[QuantPlus]

So with retail forex "trading" you don't get to own the currency, plus I've read you automatically get leverage up to 200:1, there are no brokerage fees, the brokers/banks make their money through the large spreads.

Which doesn't sound much like bitcoin trading at all. Sounds more like you are just betting on which way currency pairs will go, and the "bookmaker" makes money directly off all the retail traders through the spread. (And the leverage is there to get the money back quicker from the punters?!?)

OK, now I understand why trading btc looked more like stock trading than (retail) forex trading. And I don't think I'll get into forex  

The kind of "Forex trading" you reference is pure Mook Skinning.

All serious Forex traders trade on ECNs...
Where the Order Book is comprised of all MM and Customer orders...
And the fees are $2.50 per $100,000 or less on volume...
(Googling "Forex ECN" can't be too hard...
Though a lot of Mook Skinners LIE and call themselves an ECN).

BTC trading is similar to trading a very volatile, manipulated, junior stock...
But worse, because you have non-trivial counter party risk...
And one cannot be hedged unless one ventures onto dodgy BTC derivative exchanges...
Which is probably worse than being unhedged.

You pretty much have to believe BTC is going a lot higher to trade it.

[empoweoqwj]

So with retail forex "trading" you don't get to own the currency, plus I've read you automatically get leverage up to 200:1, there are no brokerage fees, the brokers/banks make their money through the large spreads.

Which doesn't sound much like bitcoin trading at all. Sounds more like you are just betting on which way currency pairs will go, and the "bookmaker" makes money directly off all the retail traders through the spread. (And the leverage is there to get the money back quicker from the punters?!?)

OK, now I understand why trading btc looked more like stock trading than (retail) forex trading. And I don't think I'll get into forex  

BTC trading is similar to trading a very volatile, manipulated, junior stock...
But worse, because you have non-trivial counter party risk...
And one cannot be hedged unless one ventures onto dodgy BTC derivative exchanges...
Which is probably worse than being unhedged.

You pretty much have to believe BTC is going a lot higher to trade it.

Appreciate the input. And yeah, I did try bitfinex ;-)

I do  think BTC will go a lot higher medium-term. But if I believed it would be a smooth ride, I would probably just "buy and hold" and not think about trading.

My motivation to "trade" really came about during the last bubble. It was darned obvious (to my mates at least) it was a bubble, but I was like a deer stuck in the headlights when it was actually happening. If I had been smart, I would have had lots more bitcoins now than before the bubble.

So I guess I'm just looking for a strategy to cope with the next bubble, should it come along ............

[monsterer]

The kind of "Forex trading" you reference is pure Mook Skinning.

All serious Forex traders trade on ECNs...
Where the Order Book is comprised of all MM and Customer orders...
And the fees are $2.50 per $100,000 or less on volume...
(Googling "Forex ECN" can't be too hard...
Though a lot of Mook Skinners LIE and call themselves an ECN).

It's actually more complicated than that; even pure ECN brokers have an internal order-book which they match purely in-house as a market-maker. Of course they also have the ability to place your orders with a real liquidity provider, but whether they do that or not is a decision they take and not one you can control.

A good rule of thumb here is that any system for trading on a market which uses a read-only price-feed (as all forex brokers do AKAIK) is more akin to betting than trading, because you are playing against a closed system which cannot be altered by your own trades.

A real exchange is a totally different beast, you can affect the price and they don't care whether you win your trades or lose.

At the end of the day there are good forex brokers and bad ones, but the scope for them to be bad is very large due to the nature of brokers and the price feed.

[RavinTavin]

Stocks only ever going to be 21 million.

[QuantPlus]

The kind of "Forex trading" you reference is pure Mook Skinning.

All serious Forex traders trade on ECNs...
Where the Order Book is comprised of all MM and Customer orders...
And the fees are $2.50 per $100,000 or less on volume...
(Googling "Forex ECN" can't be too hard...
Though a lot of Mook Skinners LIE and call themselves an ECN).

It's actually more complicated than that; even pure ECN brokers have an internal order-book which they match purely in-house as a market-maker. Of course they also have the ability to place your orders with a real liquidity provider, but whether they do that or not is a decision they take and not one you can control.

A good rule of thumb here is that any system for trading on a market which uses a read-only price-feed (as all forex brokers do AKAIK) is more akin to betting than trading, because you are playing against a closed system which cannot be altered by your own trades.

A real exchange is a totally different beast, you can affect the price and they don't care whether you win your trades or lose.

At the end of the day there are good forex brokers and bad ones, but the scope for them to be bad is very large due to the nature of brokers and the price feed.

My main business is trading stocks (about 500 trades/day)...
But I trade Forex every day on IB's IDEALPRO (maybe 10 trades/day)...
Which is what I call an ECN = "real exchange"...
My Limit Order has the same status as all other orders...
It becomes the bid/ask if its the best ...
And, of course, IB or anyone can fill it at my Limit...
Plus I probably get price improvement 20% of the time.

By contrast, Mook Skinners maintain a market with about a 2 pip spread...
So these unfortunate souls are paying $20.00 per $100,000...
Which is > 10 times what traders on ECNs pay...
A rate that dooms you to go broke eventually.

[stomachgrowls]

I'm a noob trader, and just trying to get to grips with all the concepts involved.

Can experienced traders provide some insight into how they see bitcoin trading, whether it more like stock trading or forex, it would be very interesting. If this has been discussed before, apologies.

tia

When we do speak about similarity then it would really be having these keywords;

Its both a market (up and down price)
Compose of (sellers and buyers)
Can apply (TA and FA)

When it comes to opposites;

Legalization
Volatility
Recogtion/Popularity
Profitability
Risks factor


You would be finding for yourself once you do step your foot in between these markets.
Just to speak that im a forex trader wayback but since im really that attracted to crypto volatility then
i had decided to stay on this market although its risky but its worth if once you do have a good grasps of it.

[GreatArkansas]

Almost the same because in terms of the underlying mechanics, bitcoin trading is comparable to forex trading; however, it differs from stock trading in terms of the assets traded and the degree of regulation.
Due to market volatility and a lack of regulatory oversight, cryptocurrency trading carries a high level of risk; as a result, it's crucial to proceed carefully and employ effective risk management techniques.

[MusaMohamed]

Almost the same because in terms of the underlying mechanics, bitcoin trading is comparable to forex trading; however, it differs from stock trading in terms of the assets traded and the degree of regulation.

Cryptocurrency market is a youngest and has less regulations so in future, it will be regulated more. This young market is sensitive with news about regulations and anyone joins it must prepare to be affected by news first. When they have more time in the market, they will be less affected by news after better understanding how this market operates.

Due to market volatility and a lack of regulatory oversight, cryptocurrency trading carries a high level of risk; as a result, it's crucial to proceed carefully and employ effective risk management techniques.

Lack of regulatory oversight causes better chance for market manipulation and scam. Scam is not tolerated morally and more regulations should be enforced by law regulatory authorities. Manipulations are thing can not controlled completely in all markets and cryptocurrency market is not an exception.

Personally I love cryptocurrency market volatility and I realize that I can enjoy it by holding Bitcoin and wait for fud to accumulate discounted bitcoin.

[pgbit]

I'm a noob trader, and just trying to get to grips with all the concepts involved.

Can experienced traders provide some insight into how they see bitcoin trading, whether it more like stock trading or forex, it would be very interesting. If this has been discussed before, apologies.

tia

The way I would approach bitcoin trading is like stock trading. You would need to do your own research to identify the underlying trends and analyse the performance of the asset before making a decision to buy or sell. Bitcoin is quite volatile and so you have to be aware of this when trading. I would also recommend setting stop loss and take profit orders to manage your risk.
As for Forex, it is slightly different in the sense that you are trading currency pairs instead of assets. You would need to understand the fundamentals of the underlying currencies and how they interact with one another. It is also important to consider the technical indicators and price action when trading forex. This will help you identify potential entry and exit points.

[goaldigger]

Almost the same with the strategies and indicators, the only difference is the time frame and market hour, cryptomarket are working 24/7 while stocks and forex are not. Also, Stocks are more predictable while in crypto it is more volatile. But if you are talking about trading in general, you can expect the same trend and approach, indicators are your best friend on any market, so make sure you understand how to use it properly.

[crzy]

Almost the same with the strategies and indicators, the only difference is the time frame and market hour, cryptomarket are working 24/7 while stocks and forex are not. Also, Stocks are more predictable while in crypto it is more volatile. But if you are talking about trading in general, you can expect the same trend and approach, indicators are your best friend on any market, so make sure you understand how to use it properly.

Indicators can work in any market, and yes its good to understand this because this can be a big help when you trade. Cryptomarket is prefer by many trader now because of its volatility where they can more money as a trader. Forex though are also volatile but not all trader want to trade on this market since you need to have a good broker here, and its not easy to find a good one. I prefer crypto for now because I’m making money when I trade, is also offer other opportunities.

[Unbunplease]

If you look at the trading tools, there are many similarities. Indicators, trading strategies - there are no particular differences. However, it should be noted that in the cryptocurrency market, there is a lot of volatility, and a lot depends on bitcoin.