Cryptocurrencies trading on the crypto exchanges has similarities with forex: in fact, this is speculation in price – “bought cheaper, sold for more”. At the same time, forex trading has a lot of nuances, instead the cryptocurrency market, which is not predictable: any hype reason can affect prices. What can a trader choose?
Forex vs. Crypto market
- For a newcomer.
- Opening an account, entering and withdrawing of means, a minimum deposit.
- Volatility and profitability with examples.
- Trading time and connection to the exchange.
- Selection of currency pairs.
- How to analyze? Technical and fundamental approaches.
Crypto market. It’s easy to learn crypto-trading, there are training videos on videohostings, and there are enough articles on the Internet that will tell you from A to Z about the cryptocurrency trading on stock exchanges. It is enough to choose an exchange, register, make a deposit, buy at the lowest price – sell at the highest. In general terms that’s all.
Forex. For successful trading on Forex it is important to be able to read candlestick charts and have a good understanding of the news influencing pricing, distinguishing between the paramount and the secondary. To be aware of political situation and be able to predict the situation. As well as to know the basics of fundamental and technical analysis.
Opening an account, entering and withdrawing funds, minimum deposit
Crypto market. The registration can be completed in 5 minutes, however, the international stock exchanges before admission to operations or increase in the withdrawal limit require obligatory confirmation of the identity, for which all the data in the questionnaire must be correctly filled in, and the good quality scans of three documents sent to the market: passport, driver’s license, identity card (ID) in English.
The account can be opened as on the stock exchange itself, making transfers to it in Fiat with Visa or Mastercard, advcash, and on third-party services, such as blockcain.info.
The minimum deposit, a rule, can be any amount.Forex. For registration you need a confirmed e-mail, the input and withdrawal of funds is made from Visa or Mastercard to your account.
Volatility and profitability with examples
Cryptocurrency exchange. How much can you earn on a cryptocurrency? Despite the relatively small capitalization of $ 750 billion versus $ 10 trillion of forex, cryptocurrencies trading on the exchanges is much more profitable. Sharp jumps can cause any hype reasons, such as news about the prohibition of cryptocurrency in China (bitcoin collapsed by 22%), the state regulation of cryptology in South Korea, or a referendum in the UK, when it grew by $ 100 per day.Such trading is profitable in short-term periods, when the trader correctly interprets news and analyzes the price movements. The income can reach tens of percent per day.
If the yield is higher, the risks are higher too.
For example, at the beginning of December 2017 you bought bitcoin cash for $ 100, this is about 0.08 BCH, in January you caught a HYPE and were able to sell your 0.08 BCH for already $ 300. Without taking into account commission for input and output you benefited by 200%.
Forex. How much can you earn on Forex? The volatility of trading on the forex is lower, accordingly, you can earn less, but that also reduces the risks. This is due to the great depth of the market.
Quotations are relatively stable; the market of world currencies is strictly regulated by the states. It’s not easy to inflate or collapse prices. The volatility of the largest currencies is no more than 0-3%, and successful traders are able to make up to 2-5% per month.
By investing $ 100 in an account in forex, in 12 months you can at best earn 20-30% from them, which is $ 20-30.
Time of bidding and connection to the exchange
Cryptoexchange. Trades are held in non-stop mode 24/7. The rest already depends on the stock exchange itself. If works stable, then there will be no trading breakdowns. All transactions with the currency you conduct yourself, working directly with the stock exchange.
Forex. Biddings are held 5 days a week around the clock. Trading always happens through a broker, and maybe even an entire network of intermediaries. The risks here are connected with the braking of the signal between all bidders. You can miss the right moment. You can often meet scammers among brokers.
Choosing of currency pairs
Crypto-exchange. The choice of currency pairs on large stock exchanges is wide. About 100 different currencies can participate in trades, with many combinations in pairs. Popular couples (BTC/USD, BTC/ETH, LTC/BTC, etc.) are traded constantly, while less popular ones have to wait for weeks. Due to high volatility, profit can be obtained even with a minimum trading volume. Alternative crypto currencies can jump in price in a moment.
Forex. The trader can choose the currency pair only based on the broker’s offer, if even the EUR / DDK pair is represented on the site, and the broker does not have such a pair, the trader will not be able to conduct trading with it. Most often, as on exchanges, the most popular pairs of currencies of the world currencies EUR / USD, CHF / CAD are traded on forex. In this, each of them has its own “character” and the type of “behavior” and requires detailed study before bidding.
How to analyze? Technical and fundamental approaches
Crypto-exchange. The fundamental analysis is not applicable to cryptocurrency trading. Cryptocurrencies are not regulated by governments, not tied to a specific state, and the demand for them bears a spontaneous character. Even if the price jumps depend on the news, then this is not fundamental news, but fleeting hype events.
Technical analysis in cryptocurrency trading will be the most effective tool. Tracking the charts and trends will give an understanding to the trader about the closest perspectives and will allow you to accurately predict the jumps. It’s better to use robots for analysis and tracking the minimum movements, which can lead to the greatest profit. Nevertheless, the cryptocurrency trading on the stock exchange still requires a strategy.Forex. Trading on Forex can combine two approaches. The rate of fiat currencies often depends on the economic events of the country (the US, for example, when it comes to the dollar), if the situation on the labor market in the United States has improved, or the prices for consumer prices in the European Union have decreased, or maybe the dollar has appreciated against the euro.
Crypto-exchange. Risks are connected with incorrect forecasting and loss of money because of the course jump, pumps, and dumps. Nevertheless, the purchased crypto currency remains in the trader’s possession and at any time it can be exchanged for a fiat or another currency. Crypto-exchanges are often exposed to hacking, hacker attacks and scams (BTC E), so it’s better to store money on a third-party wallet rather than on the exchange.
It’s better to buy a cryptocurrency for the money that you do not regret losing.
Forex. Trade doesn’t take place on your finances, but on credit, where the loan amount can exceed your budget by five. In case of a loss, you’ll instantly reset your entire account. There are often unscrupulous brokers come across who wind up numbers and work dishonestly.
Forex trading still remains the leader in popularity due to the large number of launched tools, understandable strategies, and predictable behavior of currencies. Crypto trading has appeared relatively recently, the funds have not yet learned to insure against market leaps, the courses of the cryptocurrencies are unpredictable and avalanche-like. However, the crypto currency trading gives x100 x1000 profit to traders, then, as on Forex it is possible to earn x1.2 x1.3.
And if you become a forex trader it will not be easy to benefit much because of high requirements for technical knowledge, while even beginners can earn money on the crypto currency trading.