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  • Friday 7 May 2021

    Crypto vs Forex: Which Is The Best Choice For You?

    Crypto trading and forex trading both involve trading currencies - but they’re two very different types of currency. Cryptocurrency trading involves trading digital currencies that are decentralised and largely unregulated. Forex trading meanwhile involves trading official currencies that are governed by countries. 

    Both crypto and forex can have their pros and cons. This guide delves into the advantages or drawbacks of each to help you decide which is the best investment option for you.

    How much risk are you willing to take?

    Cryptocurrencies are a lot more volatile. This means that they can rise dramatically in value (as has been the case with Bitcoin) or dramatically fall in value (as was the case with Ripple last year). You could make a lot of money investing in DOGE coin or another popular cryptocurrency, but you could lose a lot of money. On top of this, there are added risks such as having your cryptocurrency hacked or falling victim to a glitch. For this reason, you need to be careful as to what you invest.

    Forex trading has its risks too but tends to be a more stable form of investment. Real world currencies are less prone to huge fluctuations in value - any rises or falls tend to be more gradual and easier to predict. You’ve also got more laws in place to protect your investment.

    How much money do you have to invest?

    You should also consider how much funds you have to invest. Cryptocurrency exchanges tend to require very small deposits make it possible to invest your spare change if you don’t want to make a big investment. There are fees to consider when using a crypto exchange, but these tend to be fairly low. 
    Forex trading often requires much bigger minimum deposits (usually around $100). There can also be bigger fees while trading - although this depends on the broker you’re using. Consequently, forex is better suited to those wanting to invest larger amounts. However, you don’t have to be rich to invest (a common myth that puts many people off).

    How much leverage do you need?

    You can expect a very low amount of leverage when trading via cryptocurrency exchanges. This means that you can’t borrow as much to invest when you haven’t got the available funds. This could stop you losing as much, but could also prevent you making as large gains.

    When it comes to forex trading, the leverage offered by brokers is much higher. This can make it possible to take advantage of changes in price by using capital. This could mean greater wins (but also potentially greater losses). 

    What trading hours are best for you?

    Cryptocurrency can be traded at any time. This can offer more flexibility for people who want to buy and sell at the weekend, although it also means that you have to be on the ball 24/7 when it comes to changes in value.

    You can similarly trade forex 24 hours per day but only on weekdays. Some people may find this restrictive, although others may enjoy being able to take a break at the weekend. 

    Why not both?

    A lot of long-time forex investors have been giving crypto trading a try. Similarly, many crypto traders are now starting to branch out into forex trading. With access to both markets, you may be able to reap the benefits of both of them, while also reducing the risks by diversifying your portfolio. 

    Sifiso Nkwanyana

    Author & Editor

    I hope you have recieved all the information you seek and thank you once more for browsing our website we hope to hear from you soon.


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