First of all, one of the most important differences between Bitcoin and the forex market. Bitcoin is a digital currency, independent of any government or institution (decentralization), while the major players in the forex market are central and c. Dec 19, · “Bitcoin’s daily trading volume, which currently ranges in the mid-single digit billions of U.S. dollars, pales in comparison to that of the forex market,” said Cox. A drop in the ocean, some might say. Bitcoin’s volatility is also considered to be far higher relative to that of the most dominant currency pairs in terms of volume. Apr 01, · Forex trading is large. The average daily turnover rate for Forex is in the trillions, with $5 trillion USD being traded in Forex in Compared to that, the most significant coin in crypto, Bitcoin, had only $1 billion USD turnover.
Difference between forex trading and bitcoinBitcoin vs Forex: Understanding The Differences - FXCM UK
The lack of a middleman is one of the biggest draws of crypto trading. And another major sticking point between the two is the liquidity available in Forex, versus the lack of liquidity in crypto — once you move away from the most common coins. Forex trading is large. Returns that high are almost unheard of in Forex trading. Since Forex trading is so established, it is a regulated and mature market. This means that middlemen are everywhere in the Forex world. From brokers to exchanges, and other hidden fees and costs, Forex trading can get expensive, even before a trader has turned a dollar in profit.
This means that Forex traders need to have pretty substantial capital also before they can trade. Institutional involvement is another significant aspect of Forex trading.
Unlike crypto, Forex traders are competing with established banks, high-frequency traders, and other specialized firms. This institutional involvement can make it difficult to compete. Forex also lacks the same volatility present in crypto, making it hard to take advantages of small differences in exchange rates. However, this comes with the benefit of easily available liquidity. Orders like that tend to be filled nearly instantly.
For crypto trading, large trades often have a huge impact on price. The fees are usually much less than Forex fees, and the lack of a middleman means that there are no hidden costs. There is one more major difference between the two. That difference is security. Cryptocurrencies are a comparatively new technology, with all the risks associated with emerging tech. There are mountains of stories in the news about cryptocurrencies being hacked, stolen, or simply lost due to glitches. Due to the immutable nature of the blockchain, such actions are incredibly difficult to reverse, though not impossible.
There are also very little to no regulations surrounding crypto trading. This can leave traders open to scams and fraudulent behavior with no method of recourse. Forex trades often carry some level of protection, and brokerage accounts are usually insured by the government in the event of theft or fraud.
Both Forex trading and crypto trading carry their own pros and cons and their own risks and rewards. Generally speaking, Forex trading is more stable, more protected, and highly regulated.
Crypto trading carries the promise of much larger returns than Forex, at the cost of the stability of Forex. This means that smart and skilled traders with a large appetite for risk can realize much higher profits in crypto than they could in Forex trading, while not dealing with the same institutional involvement.
Trillions of dollars are traded in the Forex landscape on a regular basis. A major part of this volume can be credited to the developed and established currencies of the world. The U. S dollar, in particular, proves to be a highly preferred reserve currency. This is another area where you will notice forex and bitcoin similarities. As most of you may know, Bitcoin happens to be the most dominant crypto currency out there.
It has perhaps the highest trading volume among all crypto currencies. However, this is the extent of the similarities between forex and crypto trading as far as liquidity levels go. Currently, the trading volume of Bitcoin on a daily basis ranges in billions of dollars in a single digit.
Forex however, as we mentioned earlier has quite high volumes as far as day to day trading goes. Some even go as far as to state that the daily volumes of Bitcoin are like a drop in the sea. In addition, Bitcoin is also a really volatile crypto currency, it faces far more fluctuations than forex. That being said, this does not mean that Bitcoin traders can earn huge fortunes if they are wise with their trading. It would be fair to say that and onward has not been able to replicate the former glory that bitcoin once had.
However, in the crypto currency world, things can change in an instant. Trading, no matter it is for forex or crypto, is not an easy task. It is particularly difficult when a trader want to trade short term and earn massive profits through it.
Only a small number of traders are able to win big in the crypto currency and forex trading world. These traders dedicate a major chunk of their time towards finessing their art, which is why they obtain fruitful results.
Sure, there are tons of success stories that most of us come across. These stories are often shown on the media. What the media does not show however, are they losses that thousands and thousands of participants incur who end up getting demotivated and quitting crypto or forex trading altogether.
Renowned billionaire trader of currencies George Soros has been making waves since All forex and crypto traders can take notes from his success, particularly the day when he made one billion dollars in a single day in by betting pound sterling.
Soros is perhaps the rare exception who achieved numerous success while trading mainly against central banks for several decades.
Soros used a simple yet effective strategy to achieve financial success in trading, During the time, Britain faced high exchange and inflation rates against the U. S Dollar. Soros took full advantage of this and sold pound in short by utilizing several systematic trades. While Soros made 1 billion worth of profit by doing this, the value of pound went down even further. Sure there are several major differences between forex and bitcoin markets but there are also many similarities.
There is also potential for traders to create convergence as more and more digital assets start to become cemented in the worldwide financial system. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Bitcoin Trading Is a Perfect Combination of Skill and Luck Most of us are well aware of the fact that crypto currencies go through countless variations.
Forex Markets Have Deep Liquidity Levels Another vital fact worth noting is that markets in forex have entrenched and deep liquidity. Learn From this Successful Case Renowned billionaire trader of currencies George Soros has been making waves since Bottom Line Sure there are several major differences between forex and bitcoin markets but there are also many similarities.
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