Well, there’s no definitive answer to this hypothetical question. This is based upon individual thought processes, likes and preferences, as both these virtual trading options are lucrative and trending. Some prefer dealing in foreign exchanges, while others go for crypto trading, which is a new kid on the block. Let’s get a sneak peek into this much debated topic among new investors, crypto traders and forex merchants.

Basics of Forex Trading

It is the exchange of one currency with another. The sole idea is to earn profit at the right moment, when the currency that you’re holding fetches a higher or better price, compared to the one with which you’re exchanging. It is an ever changing and dynamic trading scenario, where the exchange rates cannot be influenced by individuals. There’s always a huge demand for foreign exchanges or foreign currencies due to ever increasing international trade. This makes it quite evident that there’s a high liquidity in the market. Before you begin with forex trading, it is best advised to research about your country’s regulations, regarding the same.

Basics of Crypto Trading

It is the process of buying and selling of prominent crypto tokens on the most popular cryptocurrency exchanges to earn big margins. There are certain centralized crypto trading platforms or exchanges, where you can create a dedicated account, and start trading from day one. But, there are also some decentralized exchanges that allow paper-to-peer trading. You also need to open a crypto wallet on an exchange with the help of a cryptocurrency broker, and thereafter start investing for trading in cryptocurrencies. You can deposit, as well as withdraw. In fact, you can also swap one crypto with another, instead of any fiat currency.

Some popular crypto currencies are Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Dogecoin (DOGE).

Pros of Forex Trading

• High Liquidity Market – Forex has the blessings of high liquidity at any given point of time, which ensures seamless trading with low transaction fees, thus offering traders and investors the unparalleled advantage of executing their strategies effectively.

 

• Globally Accessible – The one main benefit of forex trading is its worldwide accessibility, from anywhere and anytime. You simply need to have a reliable internet connection for participating in foreign exchange trading, 24 hours a day and 5 days a week.

 

• High Earning Potential – There’s always a huge potential to earn in forex trading, as brokers provide great leverage. This allows small traders to take full control over significant markets with a very little investment, thus enhancing or maximizing return-on-investment (ROI).
• Diverse Trading Options – Trading in foreign exchanges offers traders or investors the option of currency pairing (EUR/AUD, USD/EUR, USD/GBP). This allows investors to diversify their trading portfolios and explore multiple trading strategies.

Pros of Crypto Trading

• Possibility of Bigger Returns – As crypto trading and cryptocurrencies are known for their extreme volatility, a user or trader may experience extensive price fluctuations in a short time period. And, experienced traders can take full advantage of these fluctuations, thus maximizing monetary gains.

 

• Flexibility and Decentralization – When compared to various other conventional financial markets, crypto operates in an unregulated and decentralized environment. This offers investors with a higher amount of flexibility for making right cryptocurrency investment choices and finetune their strategies.

 

• Minimum Transaction Fees – As compared to traditional financial markets like shares, mutual funds, SIPs, precious metals trading, etc. Cryptocurrency trading has significantly lower transaction fees, thus ensuring cost effectiveness and money saving in the long run.

 

• Secure, Easy & Instant – The use of Blockchain technology enables crypto trading to become more secure and lightning fast. This brings in more transparency, thus minimizing fraud and malpractices.

Operating Hours

In the case of forex trading, it can be performed 24 hours a day, and 5 days a week. This is mainly because there are different forex markets globally, and when one is operating on the last day of the week, it might be a weekend for another country in a different time zone. This is one hindrance.

Whereas, the crypto trading market is always open in a 24/7/365 days mode. A cryptocurrency payment processor is working round the clock, ensuring traders get the exact amount into their account or crypto e-wallet, upon buying and selling crypto tokens. It doesn’t matter whether it is a Saturday or Sunday.

Forex & Crypto Market Capitalization

As Blockchain is the technology behind the operation of crypto tokens, it is completely transparent when it comes to analyzing data. It makes it easier for a trader or investor to analyze the overall market capitalization of cryptocurrency, by collecting valuable information.

On the other hand, determining the total market capitalization of forex is somewhat more difficult and complex. This is mainly because the market operates between parties over-the-counter, and on credit. This is what makes it opaque and difficult to analyze.

Volatility in Crypto and Forex

The forex trading market as a whole is dominated by several multinational banks and reputed financial institutions, while the fiat currencies that are exchanged or traded are controlled by the federal government of that particular country. This ensures the volatility in the forex market to be comparatively lower, as some major international currencies move just a fraction of a percent every day.

Whereas, crypto trading is highly decentralized. It is highly volatile and also a risky proposition to invest in, as it is a new kid on the block. Any investor who is buying and selling cryptos worth billions of dollars can significantly influence the market price. This eventually leads to extreme volatility in the price of crypto tokens like Bitcoin and ETH.

Which is More Safe?

Even though forex trading comes with its own set of risks, it is more stable because it has been around for ages and the market is large. Moreover, it is governed by an extensive set of regulations and has the full backing of different governments from around the world. Thus it is more secure, as centralized banks would be quick to react and correct, if there’s a significant shift in the price of any currency.

On the contrary, such protection does NOT exist in the cryptocurrency trading market as of now, and various governments are working towards this aspect in achieving a standardized working or operating procedure. Since it is a combination of centralized and decentralized entities, there’s a higher probability of scams and manipulation.

Conclusion

To end with, both can be complicated and complex trading options, provided you have researched on these two markets, analyzing the pros & cons, apart from the security and transparency features. In the case of forex, the returns can be lower than crypto, but it is more or less regulated and less volatile, this sums it up.