Crypto trading is often considered to be similar to Forex, or foreign exchange trading. Forex, like crypto, involves trading currencies. However, there are some key differences between the two.
Forex trading is a big and established practice, while crypto trade is a newcomer to the world. Forex often involves intermediaries, brokers, and other institutions that receive payments at every step of the trading process.
The lack of intermediaries is one of the biggest drawings of crypto trading. And another important point between them is the liquidity available on Forex, versus the lack of liquidity in crypto - once you get away from the most common coins. And of course, there is security.
Let’s look at the differences between them in detail.Swiss Franc vs. BitcoinForex trading is very large. The average daily turnover rate for Forex is trillions, with $ 5 trillion USD traded on Forex in 2016. Compared to that, the most significant coin in crypto, Bitcoin, only has a turnover of $ 1 billion USD.
BTC trading is not even as big as Forex trading in the Swiss franc, responsible for 5% of trading volume and $ 243 billion USD in daily turnover.
However, unlike Forex, crypto trading can show returns of more than 70%. High returns almost never occur in Forex trading.
Because Forex trading is very well established, this is an orderly and mature market. This means that brokers are everywhere in the Forex world.
From
currency exchange brokers to exchanges, and other hidden costs and costs, Forex trading can be expensive, even before a trader makes a dollar profit.
This means that Forex traders need to have considerable capital before they can trade. Institutional involvement is another important aspect of Forex trading.
Unlike crypto, Forex traders compete with established banks, high-frequency traders, and other specialized companies. This institutional involvement can complicate competition.
Stability and VolatilityForex also does not have the same volatility in crypto, making it difficult to take advantage of small differences in exchange rates. However, this is complemented by easy-to-obtain liquidity benefits.
In other words, it is quite easy to trade certain currencies with other currencies, such as trading US dollars for Nigerian naira. Such orders tend to be filled almost instantly.
Because Forex has a high daily turnover, there are many pairs that exist even if they are small currencies.
Foreign exchange liquidity also ensures that even large trade will not change the asking price of a particular trade too much. For crypto trading, large trade often has a large impact on prices.
Although crypto prices can change for large orders, especially when dealing with altcoin and less-known tokens, there are almost no barriers to entry.
It’s easy to start crypto trading, and many online platforms allow users to jump and start trading practically instantly.
Costs are usually far less than Forex fees, and the lack of intermediaries means that there are no hidden fees.
Crypto Volatility also says that large daily swings are possible and common, meaning that it is much easier to buy at lower prices in the morning, and sell high at night.
Security and RegulationThere is one more major difference between the two. The difference is security. Cryptocurrency is a relatively new technology, with all the risks associated with new technology.
There are many stories in the news about cryptocurrency being hacked, stolen, or just lost due to interference.
Because of the enduring nature of the blockchain, such actions are very difficult to reverse, though not impossible.
There are also very few or no rules regarding crypto trading. This can make traders open to fraud and fraudulent behavior without the help method. Having funds that are hacked and stolen is not a pleasant experience.
Especially when there is no real way to get the money back. Forex trading often has a certain level of protection, and brokerage accounts are usually insured by the government in the event of theft or fraud.
Forex has much regulation across the world. So, it’s safer now.Which one is better?Both Forex trading and crypto trading carry their own pros and cons and their own risks and rewards. In general, Forex trading is more stable, more protected and highly regulated.
Crypto trade carries the promise of a far greater return than Forex, at the expense of Forex stability.
This means that smart and skilled traders with a great interest in risk can realize profits that are far higher in crypto than they can in Forex trading, while not dealing with the same institutional involvement.
Both markets are similar, but only in the sense that they are a form of electronic currency trading. Forex liquidity versus crypto volatility means that traders will need a completely different trading strategy for both.
So, this was the main differences between Forex and Cryptocurrency and if you have any topic in mind that you want me to cover for you then please let me know.
