The Main Differences Between Forex and Crypto Trading

Tuesday 18 February 2020, 6:01 PM AEST - 7 months ago

Usually, when people talk about crypto trading, they think it includes Forex as well. This information is partly correct, since foreign exchange trading – Forex – involves trading currencies, just like crypto trading.

Naturally, these two do come with a couple of very essential and important differences that make them almost complete opposites. The first one of these differences is the fact that Forex is quite well-established on the market, while crypto trading is more of a newcomer.

To engage in foreign exchange trading, all you need is to check the top Forex brokers for 2020, open a trading account with one, download their trading platform (or use a web-based one) and you're all good to go. On the other hand, crypto trading is harder to get into and requires a bit more research than the usual world currencies trading.

Let’s take a closer look at the things that make crypto trading and Forex two different things!

Stability and Volatility

  • Forex Trading

Forex, as an established way of trading, doesn’t come with a lot of volatility. This means that traders won’t have it easy taking advantage of any small differences that may pop up in exchange rates.

However, on the other hand, this lack of volatility favors easily available liquidity. In short, traders can easily trade any currency they own for another one. Moreover, due to the high daily turnover, Forex orders are usually filled in an instant.

  • Crypto Trading

First of all, it’s incredibly easy to start and trade crypto, because most of the online platforms where you can do so allow for an instant start. On top of that, the crypto fees are lower than the Forex ones – and crypto trading comes with no hidden costs as well.

Therefore, crypto is much more volatile than Forex. Here, large and daily swings are not only possible but also quite common. This makes it easier for traders to buy low in the morning and then sell high in the evening. 

Regulation and Security

  • Forex Trading

As you may know, Forex trading is usually accompanied by governmental insurance and not only. Brokerage accounts, besides the type of insurance mentioned, also do their best to implement several safety measures in order to protect their platform and their traders.

Naturally, in case of fraud or theft, the broker is insured and traders might not lose everything due to a simple mistake.

  • Crypto Trading

Crypto trading, on the other hand, comes with all the risks of new tech, so to speak. First of all, it is worth mentioning that the crypto blockchain is immutable by nature. 

This means that any cryptocurrency that is stolen, hacked, or lost to glitches is very difficult to bring back in a trader’s account. Moreover, there are very few regulations that govern the crypto trading market.

Given the lack of rules, traders are usually open to fraud and scams – while they don’t have any way to protect themselves either. 

Bitcoin and the Swiss Franc

  • Forex Trading

It is worth mentioning that the daily turnover rate for Forex trading is in the trillions, with more than $5 trillion traded. We’ll soon see how the Bitcoin stands in this equation.

Still, despite such a high turnover, the returns are not that big and one trader could not get amazingly rich after a single transaction. This is also because the market of Forex trading is regulated and mature, with middlemen, exchanges, brokers, costs, and hidden fees. 

Naturally, this implies that the average Forex trader must have substantial capital before they start trading – in order to be able to try their luck with Forex.

  • Crypto Trading

Bitcoin, on the other hand, doesn’t enjoy trades as large as Forex in the Swiss Franc, for example. While Forex trading had a turnover rate worth $5 trillion in 2016, Bitcoin managed to get a mere $1 billion turnover.

As such, Bitcoin is responsible only for 5% of the trading volume – and roughly $243 in daily turnover. However, trading in crypto can provide one with returns of over 70% - returns like these are almost impossible in Forex trading. 

Lastly, crypto trading doesn’t imply the trader competing with high-frequency traders, specialized firms, or banks. The average cryptocurrency trader engages a market full of people like him, new to the whole crypto trading topic, trying to learn and to adapt – if they switched from Forex. 


The last point we’d like to tackle is quite interesting, because it’s not usually talked about in the online environment – namely, the convenience of both types of trading. Here’s what we mean.

  • Forex Trading

A lot of people pointed out the fact that there are many things that you have to do when Forex trading or when simply transferring currency that you’ve acquired via Forex.

For example, you’ll need to provide a certain entity with your ID, some personal data, certain documents in case you transfer money, photos, and so on. In short, if you want to make your Forex trader account safe, you have to provide a lot of your data to the platform.

But then, when you want to withdraw funds from that account, your information is requested once again. Keep in mind that this is not a bad thing, not at all, as it enhances security – but some people don’t like it.

  • Crypto Trading

Likewise, people who don’t like their data being shared online turn to crypto trading. When it comes to this type of trading, everything you need is a Bitcoin Wallet – or the particular wallet of any other cryptocurrency.

This wallet is basically stored on a drive – even flash one – that you can take with you wherever you want and then use it to perform trades or transfers. For example, if you pass through an airport with large amounts of cash on you, you’ll be asked questions. Naturally, when you pass with a flash drive containing $100 million in Bitcoin, people won’t even blink. 

The Bottom Line

Overall, it goes without saying that Forex and Crypto trading come with differences - after all, they each handle completely opposite types of currencies.

Still, this doesn’t mean that one is better than the other. Some people may enjoy the decreased volatility of the Forex market, as they can trust and predict changes in their funds and returns.

Obviously, there are also people that place their hopes on high returns and, therefore, rely on crypto trading – given its high volatility. 

In the end, if one was to choose between Forex or Crypto trading, they’d have to go with the one that fits their funding capabilities, desire of security and returns, and stability!

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