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Crypto vs Forex Trading: Everything You Should Know Before Your First Trade


Friday, September 03, 2021 / 03:17 PM / Sponsored
Post by
Money Mongers / Image Header Credit: Crypto Hunt Game

 

If you are planning to get
started with trading and want to explore markets like Crypto and Forex. Then
you must be wondering what the difference or similarities between these two
are.

 

Crypto and Forex are said
to be two of the riskiest yet profitable markets for traders. But thanks to the
huge profit, both markets get huge attention compared to the other markets.

 

So, let’s just go ahead
and explore what these two markets have to offer us and how they are different
from each other.

Proshare Nigeria Pvt. Ltd.

Difference between
Crypto Trading vs Forex Trading

Number of
Available Instruments:

One of the major
differences between the crypto and forex markets is the number of available
instruments. The forex traders usually trade in currency pairs like EUR/USD,
USD/JPY, GBP/USD, USD/CHF, USD/CAD and others. However, the options are limited
only.

 

But on the other hand,
there are more than
11,000
different cryptocurrencies are available
. Even, the number of
cryptocurrencies is growing too much that it is hard to keep the count.

 

But there are only a few
coins that get actively traded which includes Bitcoin, Ethereum, Litecoin,
Ripple, and others.

 

In short, the crypto
market offers you much more options for trading. While the forex market has a
limited number of instruments only.

 

Liquidity:

When it comes to
liquidity, the forex market is an extremely liquid market. The forex trading
volume
exceeded 6.6
trillion back in 2019
. As a result, it will be super easy for you to
buy or sell your favorite currency pair. This makes it easy for you to get out
of the trade at your desired price.

 

But the same doesn’t go
with most cryptocurrencies. Of course, if you are trading in the most popular
coins, this won’t be an issue. But if you are going to trade in less known
coins, then you may not get to exit at your desired price.

 

Volatility:

The crypto market is more
volatile compared to forex. Even, forex market stays stable. If you look at any
cryptocurrency market, you would see ups and downs only. Even the smaller
cryptocurrencies can move up or down hugely.

 

But such moves are hard to
see in the forex markets, and it only happens in the exotic pairs. Hence, it
becomes easier for you to control risks.

Profit
Potential:

Crypto markets gained huge
popularity as they promise to offer huge profits. If you are taking a huge
risk, you are going to enjoy a great profit. But it is important as a trader to
choose the right cryptocurrency to invest in.

 

Even, the forex market
also offers huge profits. But you must increase your forex trading potential
using leverage. But if you face loss, you are going to lose a lot of money. So
you have to be careful with your trades.

Proshare Nigeria Pvt. Ltd. 

Similarities between Crypto Trading vs Forex Trading

Decentralization:

Both crypto and forex
market is decentralized. This means there is no central regulation exist on the
market. However, this doesn’t mean that the market is unstable. You just have
to be careful with your investments.

 

Similar Market Operation:

Both the market has a
similar market operation. Both work on the concept of basic supply and demand.
If there are more buyers than sellers, the price will go up. In case if there
are sellers, the price will go down.

 

Also, if there is any
negative or positive news out there, the price of both cryptocurrencies and
currency pairs is going to go up or down.

 

Trading
Account:

To get started with crypto
or forex trading, you will need to have a trading account. Also, you will need
a computer or smartphone with a stable internet connection. Both markets rely
heavily on charts. So, if you know how to trade in forex, you won’t have a
problem with the crypto market and vice versa.

 

How to Trade in
Crypto?

Getting started with
crypto exchange is a straightforward job, and there are a few things you are
going to need.

 

First, you will need an
account on
any leading
cryptocurrency trading platform
such as Binance, Bybit,
FTX or Phemex.

 

So go ahead and create an
account for any of the crypto exchanges and complete your KYC. Once you have
your account ready, you need to deposit the amount you wish to buy.

Then you must go to the
crypto market and place a buy order to purchase your favorite currency.
Similarly, you can place sell orders from the same market.

 

Conclusion:

So that was all about the
differences and similarities of crypto and forex market. I hope this has helped
you to get a clear idea about how these two markets are different from each
other. In case if there is anything else you wish to ask, then comment below.

 

Proshare Nigeria Pvt. Ltd. 

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