If you are ready to invest in cryptocurrency trading, you can start by checking out the services of these reputable brokers:
With the rising debates of cryptocurrencies, you might be wondering whether you should trade Forex or simply join the cryptocurrency trading community.
The answer is both can be valuable depending on your trading conditions.
Why? Because Forex and cryptocurrency trading have their own characteristics that can be very beneficial for your trading business. Let’s examine which one is better for your trading conditions.
The Forex market has been operating for years and years. Therefore, it has matured in terms of experience and regulations. It provides more stability and has an extensive historical background for better predictions of the price movements, as well as various rules to protect both traders and brokers against many financial crimes.
On the other hand, cryptocurrencies are still developing. This type of trading provides a wider range of options and liberty for traders to experiment without being controlled or supervised by the nations or governments.
Conventional Forex trading is a much better option if you are still new to the trading world. But, the excitement of unpredictable price movement in cryptocurrency trading will be extremely beneficial for expert traders to improve their trading skills and predictions.
2. Bound by Nation vs Decentralized Currency
Forex trading involves fiat currencies that belong to specific nations. Therefore, any political movement or economic events will significantly affect the market values of the nation’s currency.
Such cases will not happen to cryptocurrencies. That is because their price movements are purely based on the value of the coins. That is why they are NOT affected by any geopolitical or macroeconomic events.
Therefore, if you are interested in keeping yourself up-to-date with world events, classic Forex trading might be more enjoyable for you. But, if world events bore you and you are looking for more excitement in the financial business, maybe it is time for you to take a sneak peek at cryptocurrency trading.
3. Cost and Capital
With the emerging trends of Forex trading, everyone can join the market with a capital as low as even 5 USD. However, depending on the brokers, you may have to consider several underlying costs which can be quite substantial.
Cryptocurrency trading, on the other hand, might need a higher amount of capital to get you started. Still, the costs offered by the brokers are usually lower to attract more clients.
For the aforementioned reasons, Forex trading is far more suitable if you are a novice trader whose capital is still limited. In comparison, cryptocurrency trading is much better for professional and experienced traders with a higher amount of capital.
Both Forex and cryptocurrency trading present a high level of volatility. Still, even when the Forex market is considered volatile, traders believe that it is nothing compared to the extreme price fluctuation of cryptocurrencies.
Moreover, the Forex market offers massive liquidity, with over 5 trillion USD of daily turnover from all around the world. Therefore, even when the price fluctuates so much, the currencies are extremely liquid and easy to move.
However, that is not the case for cryptocurrencies for which market liquidity is extremely limited, and the price fluctuates even more extreme than the ocean tides. So, cryptocurrency trading is far more suitable for traders who want greater challenges and are ready to take risks.
5. Trading Objectives
Most experienced traders participate in the cryptocurrency market as a long-term investment, to diversify their portfolio, or simply just for fun. The extreme volatility of cryptocurrency trading makes it impossible for traders to depend on it for day trading.
That is why your trading objectives will determine which trading options you should choose. If you want to become a day trader, Forex trading is a much more viable choice. On the other hand, due to its promising prospects, cryptocurrency trading is a far better option for long-term investments.
Despite its complexity and unique nature, professional traders are willing to invest in cryptocurrencies because of its wide range of advantages:
1. Decentralized Valuation
Cryptocurrencies are independent currencies that are moving virtually in the market. They don’t belong to any country or nation. Thus, no geopolitical or macroeconomic issues will affect the value of the cryptocurrencies. Cryptocurrencies are also free from inflation or interest rates.
2. Extreme Volatility
High volatility may seem a little bit frightening for new traders. However, experienced traders see high volatility as potential profits. The more extreme volatility they encounter, the more profits they can potentially gain from a price movement. Of course, high volatility means a higher level of risk, which is why professional traders mostly come well-prepared with their risk management.
3. Better Transparency
Thanks to its Blockchain technology, records of financial transactions via cryptocurrencies are copied within the computer networks. Therefore, the transaction records are visible to almost anyone who takes part in the business. This ensures better transparency and perspective for traders to predict the price movements regarding cryptocurrencies.
4. Higher Security
Due to its pseudo-anonymous nature, you do not have to reveal your bank account or credit card information if you want to join trade cryptocurrencies. This is a huge advantage, especially when dealing with foreign brokers. It also allows you to better protect yourself from various cyber-crimes, including identity theft.
5. Low Cost and High Leverage Trading
Cryptocurrency trading is a new and promising business. That is why Forex brokers are encouraging their clients to join the party by giving them various promotions and trading services, usually with lower costs and higher leverage.
Still, you have to tread lightly because we all know that higher leverage in high volatility trading is extremely risky. Some traders even believe that it is a complete suicide. However, if protect yourself with proper risk management you can turn it to your advantage.
6. Trading Portfolio Diversification
It is a common belief in the trading community that you do not place all your eggs in one basket. If you want to diversify your trading portfolio, then cryptocurrency trading is one of the best ways to do so. It may be more unpredictable compared to other financial assets. However, just in case your other trades are going downwards, you still have your cryptocurrency asset as a backup.
7. High Investment Prospects
Cryptocurrency is still in the development stage. Over the last decade, Bitcoin has risen from just an idea to over 9,000 USD in value for each coin. Nowadays, Bitcoin is also accepted as a payment method. Furthermore, with the development of technology, cryptocurrencies show promising prospects for your future investments.