Often newbies are in a dilemma; they should conduct their business using which platform Forex or Cryptocurrency? Today, here we will discuss with you the ins and outs of each platform, and you may decide which one will be the best choice for you.
Knowing the difference
The cryptocurrency market and the foreign currency market are entirely separate, but both of them prevail some unique characteristics which make them appealing to all stage of traders. The FX market is considered the largest online trading market in the world and this global market approves to trade using all the currencies in the world. Because of its global presence, it is influenced by the major issues of the world such as jobs reports, inflation numbers and political announcements. It is such a gigantic market where more than $5.3 trillion is exchanged per FX day.
On the other hand, cryptocurrencies indicate the digital currency, which is totally different from currencies such as yen or dollars. Currencies those exchange in FX are regulated by the government, but the business which is executed using cryptocurrencies are not regulated by the law authorities. These currencies are hosted and backed online using peer-to-peer authentication system, which helps to prevent the users from using the same Cryptocurrency such Bitcoin more than once. A secured network checks the exchange for digital money. It generates cryptocurrencies which are also referred to as mining, and the people included these cash-generating processes are known as miners.
The global cryptocurrency market is taking a giant size day by day, and in previous years it reached a cap of $700 billion. FX and Cryptocurrency can seem similar because Cryptocurrency’s trading system is similar to FX, and one currency pairs are exchanged for another. However, it should be noted that both of these platforms are influenced by totally different factors. Learning about the cryptocurrencies is more like knowing about what is ETF trading. The ETF traders focus on technical and fundamental data to take their trades. This rules also applies in cryptocurrency trading.
According to historical base, we find that crypto market is more volatile and unpredictable than the Forex market because if we compare with bitcoin, we can find the volatility here is 5% to 15%; on the contrary, the volatility in the FX market is .5% to 1%.
Significant features of FX and Cryptocurrency
As Forex is a global market so it has unlimited supplies of the currencies for the trading purpose. But cryptocurrencies’ supply is so limited and how many cryptocurrencies can be created is fixed with the cap.
Leverage facility can range from 50 to 1 in FX, which means $2 dollars can worth $100 dollars sometimes. Crypto has no leverage facility, but the transaction fees are so much slower.
The FX market has the highest liquidity with millions of participants which provides simple and quick turnaround even with a large volume of currencies. A single investor cannot dominate here like the stock market. On the contrary, crypto provides huge potential with a massive gain. For example, if someone invests $1,000, then it can be $400,000 in less than five years.
FX is mainly influenced by the global news, earnings reports and announcements which help to a greater extent to find out the business opportunities easily. Sometimes it can be difficult for some underdeveloped country to trade using Forex. On the contrary, crypto allows underdeveloped country’s investors with a huge business facility online without having any banking transaction opportunities nearby.
To conclude, we may say that success depends on the engagement, whether it can be Forex or Crypto. Effective planning is crucial regarding equity and risk management. Moreover, a strong desire for continuous learning and perseverance is needed to master on these giant money-making platforms being an educated investor. Both of these markets contain positive and negative sides, but it is up to us how can we deal with them with our dynamic skills.