Here we are talking about very different worlds. Simply put, Forex is safer than trading cryptocurrencies because the volatility swings are not as wild. However, cryptocurrencies can give you access to life-changing profits – especially when using leverage, for example.
In this article, you will learn whether you should purchase bitcoin to start trading altcoins or should you start trading the Forex markets. Let’s find out.
Crypto Exchanges: Everything You Need to Know
Some days ago, the BTC price peaked over $60,000 for the first time in history. However, it has dipped to $55,500, and as it seems, the correction will keep going for a while. That’s crypto, a world of crazy volatility swings that, when managed correctly, can bring you enormous profits.
To give you an even wilder example. My Neighbor Alice ($ALICE) launched on Binance on March 15th and it experienced an increase of over 25000% – which means that a simple $100 investment would have yielded you a total of $25,000. Overnight.
Like this example, you can find many in the crypto industry. With that said, it’s clear that cryptocurrencies can bring you spectacular returns on your investment.
Furthermore, you can use margin trading and futures to increase your funds. You can either long or short cryptocurrencies with leverage of x2 up to x125, depending on the cryptocurrency.
For example, let’s suppose that you decided to short BTC from $60,000 until $55,500 with leverage of x20 and an initial investment of $1000. This operation would have brought you over $1600 in profit.
However, the same reasons that make cryptocurrencies highly profitable are the same ones that can quickly damage your capital in profound and perhaps impossible-to-fix ways. This is why you need a strong money and risk management plan to decide how much to risk in every trade at the hour of setting up your position.
Furthermore, cryptocurrency trading requires more mental and emotional control because it’s easier to try to catch up on losing trades, hence, exposing you to the risks of overtrading. Here is an example of how someone lost 200 BTC due to overtrading and making bad decisions.
Therefore, if you want to get involved in cryptocurrency trading, follow these tips:
- Set up a strong money management plan
- Keep your risk per trade between 1-2% of the total of your funds
- Research the projects heavily before investing
- Only get involved in margin and futures trading when you learn to manage your risk and money properly.
- Never chase losses and never invest in a coin that’s pumping just for fear of missing out – these are the quickest ways to lose your money.
- Learn how to execute proper fundamental analysis and technical analysis, as they will help you to seize excellent opportunities.
Forex Broker: A Complete Overview
Now, let’s talk about forex trading. It’s a decentralized market where you can exchange different foreign currencies such as USD, AUD, EUR, GBP, JPY, etc. They come in pairs such as USD/EUR, USD/JPY, EUR/GBP, etc.
Contrary to cryptocurrencies, these pairs are a lot more stable and safer. Hence, you will see fewer volatility swings and never as hard as with Bitcoin because even the news won’t affect the price.
Therefore, Forex might be better suited for traders and investors who prefer more security and stability. Hence, it’s better for the long term if you play it safe.
Furthermore, just like cryptocurrencies, you can also find the options to trade Forex futures at your chosen forex broker. Likewise, you can “bet” whether the price will go up or down based on your entry price. You can also use leverage, and it can be as high as x100, depending on the currency pair. You can use $1000 with an x100 leverage to make it $100,000.
The profit potential is lower than with cryptocurrencies, but the safety levels are considerably higher since we discuss real currencies supported by their respective countries.
We recommend you follow the same tips that we gave you regarding cryptocurrency trading. It all depends on your own research and money/risk management at the end of the day. There is also a risk in forex trading, and if you don’t manage it correctly, it will end up killing your account.
Furthermore, you can mix your investment between cryptocurrency and forex trading. For example, you can allocate 70% of your funds to forex and 30% to cryptocurrencies. You can decide your own allocation according to your risk management.
Now that you know the pros and cons of every type of trading, we invite you to test both. Always keep a strong money and risk management game, and you will succeed. Remember, it’s about winning more times than you lose.