In recent times lots of arguments has been on going in deciding the most reliable trading platform, and now it boils down to these two trading giants. With the both of them having their respective pros and cons, it is really difficult to ascertain which of these two is better for carrying out trading activities. Before we dive into the distinctive factors that makes this two trading platforms stand out, let’s have an overview of what they are and how they have come into light.
Foreign exchange market otherwise known as Forex is by far the largest market in the world. It is a global decentralized or over the counter market for trading currencies. It encompasses all aspects of buying, selling and exchanging of currencies at current and determined prices.
This market works through various financial institutions that serve as the link connecting buyers and sellers from around the globe. Forex trading has been since the adoption on the gold standard during the late 19th century.
Cryptocurrency on the other hand is a digital asset that is developed to work as a medium of exchange that uses strong cryptography to secure financial transactions. Cryptocurrency is a form of currency that exists only in digital form and it has no central issuing or regulatory body. Cryptocurrency came into light in 2009 after an anonymous programmer under the alias Satoshi Nakamoto developed the first digital form of money known as Bitcoin. It has since then been accepted and used as a means of payment on some business platforms.
No matter how far apart this two may seem, there are underlying similarities that exist between them;
- Strategies: From research it has been found that multiple techniques that are used in forex trading are also applicable to cryptocurrency trading. Since the both of them involve currency it means that they are likely to attract similar traders and similar trading tactics and rules.
- Ease of access: Trading activities of both cases happens online, this makes it easier to access, all you need is a computer and internet connection and you can begin trading on a global scale immediately.
- Prices: Forex and cryptocurrency are both products; their prices are determined by supply and demand. This is considered as the main similarity between them.
- Tools: Both forex and cryptocurrency offers multiple trading and exchange platforms.
Trading in digital currencies is not exactly same as trading in actual fiat currency, it is therefore important that you acquaint yourself with their differences before getting into a trading venture. There are some clear distinguishing factors that separate these two;
- Volatility: The factors surrounding forex trading can be predetermined. By mastering trade patterns and following trade signals; you can trade with high chances of success. This makes forex trading less volatile.
Cryptocurrencies on the other hand are more volatile. It is very difficult trading cryptocurrency because of its unpredictable nature.
- Regulations: Forex brokers are most times affiliated to financial regulatory bodies making it less likely for you to be swindled.
Cryptocurrency trading is not governed in any way by anybody. The value of the currency is what the holder deems fit. Also any loss to hackers cannot be recovered.
- Trading Hours: Forex trading occurs only during weekdays and is closed on weekends. On the other hand cryptocurrency trading takes place all the time.
- Assets: trading involves the use of fiat currency while cryptocurrency trading makes use of digital currencies; this is the most distinguishing factor between them.
In the end it all boils down to individual preferences, risk tolerance and the level of resources available to you to pick a trading platform that suits you the most.
Bill Adams has been into currency trading for over 5 years. After taking a short course about Forex and Cryptocurrency, He decided to put his knowledge to good use as a writer and trader at TenkoFX. His Educational background in Business Administration and Economics has given him a broad base from which to approach Forex and Cryptocurrency topics.