A large number of people tend to argue that forex trading and crypto currency trading are vastly different. Sure, they do have several things that separate them but that isn’t to say that they do not share any similarities whatsoever. In fact, upon taking a closer look you will notice several similarities between them.
For instance, the market for supply and demand that is present behind forex and cryptocurrency trading often governs the rates of assets.
If you happen to be a trader who belongs to the crypto currency trading world or the forex world, this article discusses the difference between forex trading and bitcoin trading, each of their mechanics and the differences and similarities between them.
First of all, there is no denying that in order to trade the and navigate when there are unpredictable market conditions and turn a profit you need to be a really savvy trader.
You must be aware of all the ins and outs of the forex or crypto world. Let us begin with the advantages and disadvantages that you will find in forex trading and crypto currency trading.
Celsius Network’s CEO, Alex Mashinsky claimed that both forex and crypto represent a digital value of any currency that can be sold or purchased with ease. Both of these currencies are quite volatile which means that you will come across multiple opportunities to make quick profits whether they are short or long.
One of the main advantages of trading forex and crypto currencies is that several massive financial players dominate these global markets. A large number of individual players are not capable of matching or competing the hedge find speeds and trading speeds along with the large banks that are present in markets like these.
Malinsky also went on to explain that the most evident difference between BTC and forex markets is – bitcoin started and began to scale with the help of global retail trade instead of institutional players. Something that forex did not do. This is a major reason why you will notice bitcoin markets behaving quite differently in comparison to the traditional markets in the forex world.
Invictus Capital’s senior analyst for investment, Kyle Cox stressed the fact that ultimately, the supply of bitcoin is quite finite. There are round about twenty-one million coins out there. Plus, because of the strict protocols, manipulating these coins is near impossible.
What this means is that bitcoin trading will purely be dependent on adoption and then essentially, the project’s quality.
As more and more people start entering the world of Bitcoin, its network size will naturally increase as well This will result and higher utility, a larger amount of users, and a price that goes up. Since there is unique centralized influenced or very little outside influence, this crypto currency remains a valuable asset.
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. These variations sometimes prove to be quite helpful for the traders while sometimes they end up costing them a considerable sum of money. It would be fair to say that bitcoin trading involves quite a bit of skill and luck.
You have to be on top of your game and be at your opportunistic best if you want to succeed as a Bitcoin trader. If you are just starting out as a crypto currency trader, it would be wise to do a few weeks of simulated o risk free trading with xtrgate.org.
It will give you a clear idea of what your course of action should be and how you should proceed with a certain transaction. It will also develop your monitoring skills allowing you to make wiser trading decisions based on bitcoin fluctuations and market demand.
There Is Very Little Cost Involved With Bitcoin
One more factor that every bitcoin trader should keep in mind is that BTC is tradable only on a peer to peer base. This means that there is the very little cost when it’s raw. This was pointed out by an expert crypto currency trader who also went on to say that this occurs because Bitcoin trading mostly is free from any kind of intermediaries, which is quite the opposite of foreign exchange markets as they are heavily dependent on them.
In forex markets, aggregators and brokers are often there for facilitating the tractions for participants. This involvement proves to be quite costly as these aggregators often charge hefty fees from their clients.
That being said, there are some instances where intermediaries get involved in bitcoin trading or the trading of other crypto currencies. You will usually come across an intermediary through a certain crypto currency trading exchange. Exchanges like these often play the role of central repositories that hold the assets.
The exchanges also levy and facilitate their user’s transactions for a certain fee. This is one of those instances in which Bitcoin shares similarities as well as differences with forex trading. Truth be told, it is quite tough to make generalized comparisons of fees and how they vary differently according to volume, currency pairs, exchanges, and several other factors.
Forex Markets Have Deep Liquidity Levels
Another vital fact worth noting is that markets in forex have entrenched and deep liquidity. This happens due to an extensive activity history. According to several well-known forex traders, the globalization and technology phenomenon has been quite instrumental in the forex world. It has significantly boosted trading activity in foreign currencies. Because of this, trading infrastructure and means are widely available.
There is also a massive increase in cross border transactions that are ballooning. Suffice to say, Forex is essentially one of the most massive market places on planet earth. 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.
Only Select Few Traders Extract Profits
After benefitting from the bitcoin high that came about in 2017, a large number of crypto traders haven’t able to make the same amount of profits. It would be fair to say that 2018 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.
Learn From this Successful Case
Renowned billionaire trader of currencies George Soros has been making waves since 1992. 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 1992 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.