forex and crypto trading

Forex and Crypto Trading – Comparison Guide

Although forex and crypto trading offer lucrative profit-making potential, they carry increased risk exposure. That’s why employing various risk management procedures to trade both markets is crucial. Besides discussing forex and cryptocurrencies in detail, we’ll talk about how to stay safe while dealing with each of them in this forex and cryptocurrency trading guide.

What Is Forex Trading? 

Forex stands for “foreign exchange,” which refers to the financial market where you can trade international currencies. In other words, it is one of the world’s most liquid markets, facilitating buying and selling one currency against another at a predetermined exchange rate. The average daily trading volume on the foreign exchange market is estimated to be above $6 trillion US Dollars. 

Currency trading relies heavily on the interconnected system of banks and other financial institutions worldwide. While the supply and demand element dictates the exchange rate for underlying currencies, people can convert their money from one currency to another without needing a physical transaction. For instance, If you have ever made an international transaction, you have had some experience with foreign exchange. 

How Does Forex Work? 

To choose between forex and crypto trading, it would be wise to learn about how each of them exactly works. During the process of forex trading, people trade currencies for potential profit. They also speculate whether a certain currency will fall or rise in value at a certain time.  

This process requires good analytical skills and a deep understanding of how the trading process works. However, people who lack sufficient knowledge about the forex market can also opt for assisted trading techniques. 

For instance, you can either subscribe to forex signals or copy trading services offered by various legitimate companies like Telegram Forex. Besides generating reliable forex signals, they allow you to replicate the trades of their expert forex professionals. 

While the forex signals are alerts or notifications that reach all traders so they become aware of a potential trading opportunity, copy trading enables you to replicate winning trades of skilled professionals and start generating passive income from day one.

In What Way Does Currency Trading Occur? 

As forex trading is an international market, no designated place has been appointed for the exchange or trading of currencies. This means that people can easily make transactions from all over the world through an online network. The forex trading market is open 24 hours a day, from 5 PM Sunday through 5 PM Friday EST. The market also happens to be open most of the US holidays. The UK and the US top the list for being the largest centers of forex trading. They have a following from Frankfurt, Hong Kong, London, Paris, Singapore, Sydney, Tokyo, and Zurich. 

Understanding Crypto Trading

Cryptocurrency or crypto is a digital asset or a currency in circulation worldwide without the help of an intermediary such as banks or the government. Instead, a blockchain is a system that keeps a record of transactions made in multiple cryptocurrencies and spreads over the entire work of computers that are part of the blockchain.  

In crypto trading, there is a buyer and a seller, meaning both a purchase and a sale will happen. Once both parties agree upon a price, the crypto trade takes place through virtual exchange. Cryptocurrency trading also comprises buying and selling digital assets that include coins, tokens, and NFT, also known as non-fungible tokens.  

A crypto coin is a digital token inside your wallet through virtual storage. Crypto coins can be used as a medium of exchange through a computer system. This is a decentralized system that keeps track of all the transactions that take place. It also makes sure that your currency is secure. An NFT or a non-fungible token is a digital asset with information stored inside, for example, music, videos, art, and games. NFTS holds a particular value in the market and can be sold by the owner keeping in mind the demand set by the market. The blockchain helps record the ownership of the NFT, and once someone is interested in purchasing, it can be transferred by the owner.  

How Does Crypto Trading Work?  

To be a part of crypto trading, you must have a cryptocurrency wallet and register yourself with a verified profile on the cryptocurrency exchange. With different crypto trading methods, do your research and figure out which is the best for you. For instance, if you have limited funds available, you can start trading crypto CFDs instead of buying them for real. CFD trading allows you to leverage sizable positions using borrowed funds, though carries increased risk exposure. 

On the other hand, buying and holding them is yet another option to trade cryptos effectively. However, depending upon your selected coin, you might need to spend more as compared to trading them as CFDs. Experts believe the crypto market will boom in the future, so holding coins in your wallet can bring you massive returns. A more detailed discussion will follow later in the article. 

Not to mention, you can also choose among various crypto strategies such as Scalping, Reverse Trading, Fade Trading, and Range Trading. As more than 19000 cryptocurrencies exist today, pick one based on performance in the market and the highest success rate. 

What Are The Popular Currencies For Crypto Trading?  

The crypto trading market operates 24 hours a day and 7 days a week. This means you can trade at any time from all over the world. Popular currencies for crypto trading include Bitcoin, Ethereum, Dogecoin, Litecoin, Cardano, Tether, Solana, and Binance Coin. As cryptocurrencies keep fluctuating with time, make sure to do your research before you make any investment. 

Is Trading Crypto And Forex Any Different?

While both the crypto and forex trading markets are subject to the forces of supply and demand, there is some difference between forex and crypto trading. Here, we’ll go through each of these variations in depth:

Market’s Players

The foreign exchange market is composed of many different players. Financial institutions, corporations, retail brokers, and traders all fall within this category. Each player in the foreign currency market performs a unique function. In the case of foreign exchange markets, commercial banks serve as a pivotal point or hub that enables the buying and selling of various currency pairs. When central banks intervene in the foreign exchange market, it’s not for profit but rather to stabilize the exchange rate of the country’s currency, which directly affects the economy.

On the other hand, there are three major players in the cryptocurrency market: exchanges, miners, and traders. Crypto transactions are processed via crypto exchanges. Individuals or businesses known as “crypto miners” are responsible for completing blocks on the blockchain network to validate transactions. Conversely, cryptocurrency traders engage in price speculation without actually purchasing any cryptocurrency.

Market’s Size

The forex market is way more extensive than the crypto market. Companies, banks, investors, funds, and individuals worldwide rely on the foreign exchange market to make instantaneous currency conversions, making it a very active and expansive system. However, the cryptocurrency market has also achieved tremendous progress due to the growth of blockchain infrastructure. The worldwide cryptocurrency market was worth $1.7 billion in 2021, and it is anticipated that this number will increase to $2.2 billion by 2028.

Market’s Structure

Both the foreign exchange (FX) and cryptocurrency markets are decentralized, meaning they are not owned or controlled by a governing body and are not subject to the whims of a single entity. 

While forex traders rely heavily on supply and demand for pricing, the costing element for cryptocurrencies isn’t much different. Forex trading occurs in the forex market, while cryptocurrencies exist primarily in the digital realm and are recorded on a distributed ledger called a blockchain. Once a cryptocurrency has been mined, only then can it be used to make a transaction verified by a digital wallet.


The foreign exchange market is highly controlled and operates largely within institutionalized marketplaces. On the other hand, the decentralized nature of crypto assets makes them more vulnerable to criminal behavior and fraudulent transactions. While there are some cryptocurrencies known to be outright scams, several incidents made clients lose thousands of dollars.


Compared to cryptocurrencies, the forex market is easier to access. Besides having minimal investment, an account with a forex broker is all you need. However, investments in cryptocurrencies require substantial funding, and they call for the use of a wallet that may have deposit limits and might be costly to maintain.
In contrast to the relatively small number of FX pairings available globally, today’s blockchain supports over 19,000 cryptocurrencies, making it difficult for investors to keep a tab on the entire crypto market.

Market’s Volatility

Both forex and crypto trading exhibit volatility. However, cryptocurrencies are more unpredictable. Even minor market shifts can significantly impact the price of cryptocurrencies, causing wild swings in a single trading session.

Although forex pairs observe heavy trading activity daily and often fluctuate within tight ranges, many investors are drawn to cryptocurrencies due to their relatively high volatility compared to the FX market.

How To Trade Forex and Crypto?

While there isn’t much difference in how you trade each of the markets, those interested in trading forex and crypto must go through several steps listed below.

1. Open an Account

The first step to trading forex and crypto is to open an account with a reliable forex brokerage or exchange. Since the market is full of good and bad financial intermediaries, it is better to sign up with a regulated brokerage or exchange.

2. Fund your account

You also need to have some funds in your account to start trading. Brokers and exchanges offer multiple methods for deposits and withdrawals, such as Debit Cards, Credit Cards, E-wallets, Wire Transfers, etc. You can select the one that fits your budget.

3. Open a Position

Depending on your selected broker or exchange, you can trade forex and cryptocurrencies by directly exchanging them against one another or using CFD contracts for each of them. 

Trading CFDs is relatively inexpensive since you only need a fractional amount to speculate over the prices of underlying assets without actually holding them. While some brokers don’t deal in real coins, you must look for an exchange that offers real crypto assets.

Forex and Crypto Trading Risk Management

Since both markets are highly volatile and are subject to high-risk exposure, you must be aware of risk management procedures to stay safe. Here we list a few of them.

Stop Loss: Whether you trade forex or prefer staking interest in cryptocurrencies, remember to employ stop loss. The purpose of a stop-loss order is to restrict the amount of money an investor loses on a security investment in the event of an unfavorable market movement. You can also save time and effort by not checking up on your assets daily if you use a stop-loss order.

Appropriate Leverage: CFDs involve leverage-based trading. That means you borrow funds from your broker or exchange to open a sizable position with limited funds. However, using excessive leverage can be disastrous. It can eat your account’s balance in seconds during a fast-moving market. Therefore, make sure to keep your leverage to a minimal level. Newbies should rather avoid using it.

Final Thoughts

Deciding between forex and cryptocurrency trading highly depends on your risk-reward preferences and market knowledge. Because of the complexity of the markets and the high stakes involved, novice traders may be hesitant to trade either. However, using some assisted techniques can make things better. 

For instance, you can join our leaderboard to receive the best trading signals or use our trading app to automate your trading activities. We tried to cover the maximum details in this forex and crypto trading review. However, if you still need more information, we have plenty of resources on our website.