Weighing the benefits of Forex and Crypto Trading
When it comes to choosing between entering forex trading or crypto trading, there are a number of things that traders need to consider before choosing one over the other. Although there are traders who tend to do both, many traders still go the route of choosing one over the other to focus on. This report takes a look at the unique offerings offered by both crypto and forex trading, as well as the benefits associated with these highly sought-after markets.
Advantages of Forex Trading
Forex trading is one of the oldest and largest forms of trading currently available. Simply put, it is the conversion of one currency into another in an attempt to make money when one currency gains or loses strength against another currency. So a trader buys a currency, say the USD, waits for it to go up or down, depending on their position, and then sells for another currency. Here are the benefits of forex trading.
Liquidity
One of the most important things when it comes to trading any type of asset is having enough liquidity. Given that the foreign exchange market is the largest in the world, with an estimated $6.6 trillion in daily trading volume, there is a lot of liquidity in the market. This means that there is good market depth across the available trading pairs.
Press agent
Influence is something that is abundant in the forex market. Forex brokers are able to provide incredibly high leverage to forex currency trading pairs due to the low volatility of the market. In some cases, leverage can go as high as 30:1, allowing traders to trade larger amounts than they have in their accounts. So by using leverage, traders can open larger positions than they have in their balance.
Photo by Marga Santoso on Unsplash
Low trading costs
Another important thing when it comes to forex trading is the significantly low trading costs associated with it. Forex traders tend to pay what is known as a “spread” and/or a “commission” of approximately 1 pip for each completed trade. This 1 pip equals about 0.08% of the trade.
Various options
There is an abundance of trading pairs to choose from in forex trading. Traders can choose to trade across major pairs, minor pairs or lesser known pairs/exotic pairs. There is simply something for every trader in the market.
Stability
The stability of the foreign exchange market is also a major draw for traders. Now, the market carries its own risk, but since it is not as volatile as cryptocurrencies, there are no large fluctuations that can quickly wipe out an entire portfolio in minutes or seconds, thanks to the large volume of trades registered in the forex market.
Advantages of crypto trading
The crypto market is still relatively new, but has grown rapidly in popularity among investors. The assets in the market are produced by a wide variety of individuals and entities, and in some cases are completely decentralized using blockchain technology. The crypto market’s pull towards traders is getting stronger every day and here are the reasons why.
High volatility
The high volatility present in the crypto market has made it very tempting for traders who want bigger margins when it comes to trading. Many of the assets in the crypto market are not regulated by an entity. Therefore, they tend to fluctuate wildly in price. These fluctuations give traders an opportunity to make a lot of money in a short period of time. However, it also increases the risk of traders losing their positions in one fell swoop.
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Low entry barrier
Unlike forex trading, traders do not need to go through a broker in order to trade. Instead, they can simply open an account in a centralized exchange, deposit money and get started. Traders can also have direct access to the market through decentralized exchanges where they can trade directly with other traders without the intervention of a third party.
The market is always open
Cryptocurrencies do not have what is referred to as “trading hours.” Simply put, the market is always open and traders can execute trades no matter what time or day it is. This “always open” feature is a big draw for traders who don’t want to be limited to specific hours or days of the week.
Conclusion
Choosing between crypto trading and forex trading is usually up to the trader’s discretion. However, platforms like Oanda have made forex trading easy, even for beginners. The platform offers a demo account where traders can learn and sharpen their skills before moving on to a live account.
The platform is one of the fastest and most reliable forex trading sites, with more than 65 popular indicators to help traders spot exchange rate trends.
Image by Sergei Tokmakov, Esq. Terms.Law from Pixabay
