For an investor trying to set their foot in the game, the Forex market has long been considered a safe, convenient starting point for beginners given its low entry threshold and not much requirement of domain specific knowledge.
However, of late, several alternate market fronts have emerged, which not only specialize in cryptocurrencies but also related financial instruments.
The emergence of crypto exchanges have put this dilemma in front of newbie investors- should they go the tried and tested Forex way or indulge in the exciting but volatile atmosphere of crypto markets.
Let’s try to figure it out and compare the opportunities offered by both markets.
Forex Trading: Basics that are Important to Know About
The global Forex system, which means “Foreign Exchange” began over 40 years ago as the world’s largest currency trading market. The exchange’s mode of operation is 24 hours 5 days a week in five continental sessions across the planet.
The continuous mode makes the flexible Peak Forex Times an additional tool for brokers to transactions of 7-8 trillion dollars daily. There are major trend-setting players on the Forex market, such as government agencies, central banks of leading countries, and international corporations. But still, most of the transactions are the result of direct interaction between independent traders. The Forex system follows innovation and is a significant competition to the new trading exchanges.
Crypto Trading: The Next Generation Choice
Next to Forex, Crypto Exchanges look like young newcomers. Having opened its processes only about 10 years ago, the cryptocurrency market, although it demonstrates crazy growth rates, still remains at the stage of active development.
Unlike traditional systems, crypto exchanges trade exclusively in digital assets, but their variety is much wider than in classical formats. Having started with Bitcoin (BTC) trading, after some time the crypto-market was filled with a variety of currencies and other digital elements. Transactions on crypto exchanges are non-stop 24/7 and amount to about 100 billion dollars daily.
Characteristics of both Forex and Crypto Exchanges
Forex and Crypto exchanges have a lot in common because both of these systems are based on the principle of trading in currency assets and speculation on changes in their prices. Additionally, we can highlight:
- Concentration on monetary rather than commodity transactions.
- A large number of private traders. The low entry threshold for trades opens up access to trading on both forex and crypto exchanges.
- The use of innovative technology and flexibility of systems to tech changes.
Key differences between Forex and Crypto Exchanges?
- For successful work in each of the systems, traders need to study in detail and effectively use the features that distinguish the forex and crypto worlds:
- Forex trading in most cases will involve interacting with professional brokers who have special access to trades, losing a portion of the reward. While crypto exchanges are open to any beginning private investor directly.
- Forex rates are more dependent on external events of the political and economic situation in the world. Forex rates are volatile depending on the position of the issuing country and its economy. Digital currencies are less susceptible to these risks.
- Forex Market is generally considered to be more stable and less risky than crypto operations. After all, real currencies very rarely lose their value for no apparent reason, while with digital money it can happen suddenly and instantly.
Conclusion: Looking for a Better Trade Format
It is difficult to understand which of the formats will be more profitable and suitable as an observer of trading processes. The choice of system will depend on the trader’s skills and personality, as well as on the goals he pursues. Both pros and cons are present in each of the systems and the perfect combination of work in both systems would be possible.
