Crypto vs Forex Trading Similarities & Differences
Regal Core Markets “Trading platforms are continuously strengthened, stabilized, and developed to guarantee secure and easy online transactions while the development and utilization of substitute currencies that make use of decentralized financial systems are increasingly viable options, as well.â€? This hails from a Regal Core Markets report on the state of trading today and why we continue to see an increase in trader numbers in recent months. Cryptocurrency and forex are among the leading alternatives to secure financial stability, especially in the present tumultuous times, as the world continues to navigate 2020. But which one should be picked? Traders continue to ask this question as they search for an ideal path to follow. This question cannot be answered without understanding the comparison between both crypto and forex trading.Â
Crypto vs Forex Trading: Similarities Both the trading markets function on the supply and demand economics. This means that in both crypto and forex markets, price activity is heavily dependent on the prevailing supply and demand at that time. So, in crypto when there is higher demand for Bitcoin, or in forex it could be the US dollar, these prices will go up within their respective markets. The same setup occurs in a situation where supply is significantly more than demand- the price of that asset will fall. Cryptocurrency is still a relatively new market, so when demand for a currency is significantly higher, it’s enough to draw attention across the globe - like the Bitcoin rush in 2017. Demand in the forex market rarely happens in a way that yields alarming attention, but this could be due to how big the market is and the fact that it has been around much longer than the crypto industry.
Trading is conducted digitally, allowing for flexibility
Both forex and crypto trading takes place digitally. So, one does not have to come to a physical location in order to conduct a trade. This is especially convenient in a time like 2020, where the coronavirus has affected how day-to-day business takes place. Trades are conducted electronically, on the internet, and any individual can trade multiple currencies on a variety of platforms. This is true for both crypto and forex trading.The ability to conduct trades online provides traders with flexibility and freedom - trades can be conducted from any part of the world. In addition to this, trades can occur in conveniently short amounts of time in both markets. For traders who want to capitalize on efficiency, trades can be automated - provided the traders know their way around setting this up.
Risk management is key to make significant profitÂ
The truth is, when it comes to forex and crypto, you have no way of knowing which way the markets will move. No trade is the same and traders must realize this. Volatility is a key feature of both forex and crypto trading - though the degree to which each market is volatile varies immensely. The crypto market is known to be far more volatile than the forex market, but the truth still remains for both spaces: traders must become comfortable with risk if they want to earn any profitable returns. Both forms of trading require rock-solid risk management to maintain profitability. This requires constant learning and practice in trading, in order to avoid incurring major losses regularly.