In comparison, the least traded major currency on the forex, the Swiss franc, has an average daily turnover of US$ billion.  Simply put, the relative size and value of the BTC market is microscopic in comparison to the forex. The Pros and Cons of Trading Bitcoin. From a perspective of market liquidity and depth, BTC is no match for the forex. Oct 24, · Trading Forex and Bitcoin generally have little requirement to start trading and opening an account (exchanges for Bitcoin). How are they different? If Bitcoin and forex can be traded the same way with many of the same common strategies and indicators, what is different about them beyond the technical aspects of trading? In this forex vs versus or bitcoin trading Singapore article Bitcoin BTC is litecoin a better investment than bitcoin Malaysia 24h. Fake forex vs versus or bitcoin trading Singapore Software Offers Binary Options, like trading in general, should not be seen as a solution to money problems. Great review. forex vs versus or bitcoin trading Singapore.
Forex vs bitcoin tradingBitcoin vs Forex, which one is better for trading? | Learn To Trade
For example, with Bitcoin. However, this also means losses can escalate rapidly. Quick, permanent transactions. Very high liquidity. The Forex has more participants than any other market, so it is quick and simple to trade even large volumes of currencies.
One single investor cannot massively influence the Forex like they can with the stock market. Massive potential gains for investors. The chance for higher rewards also means larger potential risks. Influenced by global news, announcements, earnings reports, etc. This can make it easier to find trading opportunities. Traders plan for these events ahead of time and can use techniques for fundamental analysis that are historically proven.
Available to anyone. Levels the playing field by providing investment opportunities between parties anywhere in the world. This allows individuals even in undeveloped countries without nearby banking institutions to use and trade cryptocurrencies. Both Markets Can have high volatility. This is both a positive and a negative. Volatility is present in both the Forex and cryptocurrency markets.
However, the higher the risk, the higher the reward. Though cryptocurrencies tend to wildly fluctuate, both the cryptocurrency market and the Forex market can be subject to a huge variation in price in a short period of time.
Bottom Line Trading either cryptocurrencies or foreign currency involves a high level of engagement. It requires effective equity planning, proper risk-management, perseverance and a strong desire to continuously learn.
Contact Us Search Login. Cryptocurrency vs. Forex trading: Pros and cons. By Kiyoko Hill. Some of the most popular currencies to trade have incredibly high daily trading volumes. The below graphic highlights just how severe the disparity is between the daily trading volume in the forex and bitcoin markets. Find out more about what moves the forex markets.
In markets with low liquidity, such as bitcoin or some of the more exotic currency pairs, it may be difficult to find another market participant to take the other side of your trade. For bitcoin, this problem is exacerbated by the fact that transactions are spread across multiple exchanges.
However, when you trade with IG using derivatives such as CFDs , you get improved liquidity because we source our prices from multiple venues on your behalf. This means that your trades are more likely to be executed quickly and at a lower cost.
For instance, if an asset experiences lots of highs and lows in a short time frame, it is considered to be highly volatile. Generally speaking, bitcoin is more volatile than forex pairs, which tend to move in narrow bands rather than experiencing large shifts. However, because of the high daily volume of trades, forex pairs still move a lot within these narrow bands. Bitcoin, by comparison, tends to move more significantly, sometimes up to hundreds or thousands of dollars in a single trading session.
Volatility in bitcoin is attributable to the fact that a small number of individuals hold a large proportion of bitcoins. Therefore, if one trader who holds a lot of bitcoin were to sell their share, it could flatten the market. Such players are referred to as 'whales' in the cryptocurrency world due to the proportion of bitcoins they hold. Learn about unusual cryptocurrency terminology. You can take advantage of small or large price movements using CFDs, with the option to go long or short.
With CFDs you buy or sell a number of contracts, with your profit being determined by the difference in price from when you buy and sell the contracts. Bitcoin is a relatively new market, especially when compared to forex, and so the technology used — such as blockchain — is still in its infancy. As a result, one of the main risks with bitcoin trading aside from volatility is that there is no telling how the market will develop in the coming years. Equally, a bitcoin 'wallet' — where buyers store their coins — can be accessed if a hacker is able to find the private access key.
As a result, bitcoin has its own set of risks that are consummate with the technological nature of all cryptocurrencies. The primary risk in the forex market comes from the factors which affect the price of a currency pair such as the interest rate differential between the two currencies in that pair.
Additionally, the forex market is similar to other over-the-counter OTC markets. While counterparty default may not be that big of a risk, it is still present in the forex market — especially if a brokerage firm defaults or collapses.
While there are always risks with trading, by speculating with a CFD account, you can use stops and limits to manage some of your risk. Bitcoin and forex do not have a single central authority tasked with regulating market transactions. While the forex market is an OTC market, the banks which carry out a vast majority of daily FX trades are heavily regulated. For bitcoin, transactions are verified by other participants on the blockchain network which bitcoin uses to process data. There is no central bank or inter-governmental body tasked with regulating bitcoin transactions.
As a result, there is no way for a bitcoin buyer to get their stolen coins back if they were subject to a hack or exploit in the system. This is different to forex trading because, generally, a regulator would require a bank to have safeguards in place to guarantee funds in the event of a theft. Our client's funds are held in segregated client bank accounts at regulated banks, meaning your money is protected should anything happen to IG.
Typically, the forex market is seen as more accessible than bitcoin because it can be traded directly through a broker and there is a higher number of market participants to take the other side of a trade. In contrast, bitcoin trading is less liquid and requires a wallet and exchange account. The latter can be expensive to maintain, while there are often limits on how much you can deposit. However, by trading CFDs, you can speculate on the price movements of forex pairs and cryptocurrencies without ever taking ownership of them.
Trading forex or bitcoin with CFDs should only be done by traders who understand all of the inherent risks. With that being said, there are a number of steps that you can take to limit your exposure to risk while trading CFDs with IG. While forex and bitcoin may seem a little different to each other, the dangers that traders should be aware of are the same for both markets. Primarily, like all forms of trading, both forex and bitcoin trading involve risk.
To mitigate this, traders should not enter any positions without having a viable risk management strategy in place first. Leverage enables you to spread your capital further by putting down a small deposit called margin, while receiving full market exposure. However, while leverage can increase your exposure to a market, it can also amplify your losses. As a result, it is important that traders understand how to use leverage in a responsible way before opening a leveraged position.
Discover what leverage is and the associated risks of using it. Another way for traders to limit their exposure to risk is by having a trading plan in place. A trading plan can act as a blueprint to your trading and should take into account your available capital, time constraints and appetite for risk. A trading plan can help keep traders on task during their time on the markets.
Find out more about making a trading plan. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.