Author: Robert E. Diaz

Beginner’s Guide to Forex Trading

Even the smartest people on the plant are intimidated by the term trading – and for people who believe that the Forex market or the trading market is a scary pool, the sharks are definitely going to eat them up. That said, it is not a dangerous or an intimidating task either. Just like any other form of investment or investment type in the market, the Forex market also follows the same type.

In short, it is considered as an investment market, where everything can go right, or everything can go wrong. With a simple amount of patience and practice, for most of them, it is believed to work miracles. If you’re a beginner reading this article, dig in, because we’ve got some news for you!

Introduction

This type of market is called the Foreign Exchange, Forex, FX or the currency exchange market. It is also considered a global investment market, with annual turnovers and profits rising every year. This platform is utilized to exchange the currencies of different regions, on one single platform. The activities on this type of market take place on a daily basis, except on the weekends. According to studies, in 2010, the global currency market made a turnover of $4 trillion, and since then, it has only scaled up towards success and seen a massive rise of up to 20%.

Understanding the currency market

Like noted earlier, it is a 24-hour market place, that is shut over the weekend- from Friday evening to Sunday evening. However, it is intimidating of the beginners to understand these concepts. Hence, we have jotted it down in simple terms.

Trading

The market is divided into three – the European, Asian and the united states. These currencies generally trade the main currencies, and sometimes the value of each overlaps one another. The coins that regenerated are generally treated it from of micro-lots and mini lots.

Micro lots are the ones that comprise of 1000 different types of units, which are all of the base currency and the mini lots also comprise of 100,000 units that are even from the family of the base currency. The currency exchange from one company to another takes place in the form of pairs, and this cannot be changed – as this is the way the primary system of the foreign exchange world.

The currencies are also present in the form of decimal points. One suggestion we would provide to the beginners to start with the currencies that represent a 10-cent move in their price. Although this does not sound like a lot on paper, it still is enough for the beginners to maintain their losses in the beginning and also understand the market carefully. Experts of trading also declare that the higher chances of trading enhance itself when there is a fewer option available for trading between two currencies.

Crypto Vs. Forex: Which Is More Profitable?

Both the cryptocurrency and Forex markets are very lucrative in nature, and if you are looking to invest in either crypto or forex, the decision might be extremely tough. Whatever you decide, the first thing you will have to do to start your career in forex or cryptocurrency trading is to leave the job you are currently doing. Forex and crypto trading can seem like a side business, whereas in actuality, it requires your undivided attention and probably weeks of research.

Now, abandon all hopes of making  a quick buck with either crypto or forex, because the success rate with either one of these markets is less than 1 percent. So does that mean that there is only a very tiny chance of hitting it big with forex? Of course not. Even though you might not be the next Jeff Bezos or George Soros, you can make quite a profit by trading in either market.

However, building a fortune with either the crypto or forex market is not easy. It takes a lot of hard work, analytical thinking, understanding and using analytical software tools, solid trading psychology, time and the most important one: lots and lots of experience. To raise a lot of money with these markets, as can be seen here, is quite a bumpy road which discourages a lot many traders, some even quitting after trading for a period of 6 months consistently. Losing money like that can definitely be devastating, and it can lead to mental turmoil regarding whether you made the right decision or not, even if you have. The important thing to understand is that in order to make money, you will have to prepare yourself to lose money.

cryptocurrencies

To understand more about the market, we need to understand the liquidity in each case. The first factor that any investor looks into before investing in crypto or forex markets is liquidity.  The Forex market is the world’s most active market, and so it is also the world’s largest financial market; with a global average daily turnover of 5 to 6 trillion US dollars.  Even though the crypto market is valued at 10 to 20 billion dollars a day, it is simply not comparable to the immense vastness of the forex market. So the forex market is easily at least 1000 times more liquid than the crypto market. Cryptocurrencies are usually subject to liquidity issues, especially if the currency being traded is a smaller cap cryptocurrency. Another advantage of liquidity is that technical analysis works best in liquid markets. The more liquid the market, the better will be the analysis results.

But does that mean that crypto trading yields no results? Of course not. The most traded cryptocurrencies like Bitcoin, Ethereum and Lite Coin offer much more liquidity than lesser traded ones.

Contemporary Technologies that are Used in Cryptocurrencies

For people of the 21st century, cryptocurrency and the utilization of it is not a new topic, and it does not remain alien to most of them around the world. Earlier, people believed that the invention of such digital currencies would not stand ground in the business and commercial market, and the concept will eventually wear off over the years. However, as years have passed by, we’ve realized that the use of technology can help save these innovational ideas in the market.

In short, the digital currency has been in recent years, not only for the more straightforward transaction but also for the security and sanity of the customer online. In this technologically evolving era, the use of cryptocurrencies in various fields has paved a way to produce the best return on investment. People nowadays are emphasizing on the use of right technology cryptocurrencies as they have proved to be beneficial in the commercial and business market.

What exactly is crypto?

Various types of cryptocurrencies or digital currencies are available in the current crypto market; however, the one that has taken over the world is the Bitcoin cryptocurrency. Whether it is for the use of creating cryptocurrencies like Bitcoin or for curating websites used for cloud mining services, it is vital to implicate the working of the cryptocurrencies in on the technological surface. It is a no brainer that nothing in the world today runs without technology, and so does cryptocurrency. Hence, the technology used to run this kind of currency on the digital platform is blockchain technology.

The blockchain technology emphasizes on the use of payment options over safer and secure platforms without revealing the identity of the customer. This diminishes the idea of impersonation and fraud among the people and it also safeguards the personal information of the user.

Since the transaction is directly between the digital currency Bitcoin or any other digital currency over the internet, the need for a third party is completely eliminated. Hence blockchain technology was primarily implemented to maintain these sanctions and registration of these cryptocurrencies in the commercial and business market.

crypto

Blockchain technology

The introduction of blockchain technology shook the digital industry of digital currency and also played significant noise in creating something big in the technological realm. The idea of creating a secure technology on a malicious platform, like the internet where people are often exposed to fraud and Gloomy faced negative impacts. The idea of being replicated or copied was derived from the cloud mining sector of the industry.

The block blockchain revolution started in 2016, which was when it was called blockchain technology that was defined as a digital ledger to control all economic transaction via the internet throughout the world.

Blockchain technology

The safety of cryptocurrencies

Let’s consider an instance where two people are holding keys to a world full of expensive jewellery and money. One of the vaults is public, and the other private the world that is public can be opened easily. However, it can only be opened if both the public and the private come on terms to open the world; it is like a joint account in a bank.

By doing so, this ensures safety on the digital platform to clarify the identity. In the real world, these identities are private keys public and private keys that are given to the user hence controlling the safety and the ownership of the account.

Differences Between Forex Trading and Crypto Trading

Financial markets of investments have always been pitted against each other with the aim to understand them and decode the many aspects that separate them. While similarities also appear in the mix, we have always looked at differences from time and again. So today, we are going to do the same thing and acknowledge the differences between Forex trading and Crypto trading. Hence, read the following to know more about the same.

The Factor of Liquidity

Assumptions are quite common for comparisons, but that cannot be aimed at liquidity. The factor of liquidity always belongs to Forex, and it is quite hard to think of an alternative. As a result, the Forex market’s liquidity is still far greater than that of Bitcoin, and that has remained intact for a long time. This is also one among the main reasons why investors are still holding on to Forex rather than venturing into new markets like Cryptocurrency.

But if liquidity is not a big deal for you, then Crypto trading has all the answers because it makes up in terms of decentralization and lack of boundaries.

Volatility

Volatility

If Forex takes charge of liquidity, then Cryptocurrency is bound to take hold of volatility. Cryptocurrencies are more volatile when compared to flat currencies, and that is a fact that we all have to understand. As these markets are relatively new, the traditional forces of investments don’t affect them, and people will be able to feel the benefits of it. But at the same time, this can also be a bad thing because fluctuations can happen in the space of 24 hours.

Based on the economic and political climate, such changes enter the mix and change the course of direction for every investor. One similar example of this is the numerous crashes taken place in the Bitcoin market.

Volatility

The 24/7 Format of Trading

The Forex market does open the door for 24/7 trading, but that again comes with specific restrictions. At every point in time, there is at least one market for trading currencies, but that falls short in comparison with Bitcoin. The market for cryptocurrencies is a huge one that effectively operates 24/7, and investors can feel the benefits of the same. You need not follow any form of restriction because they are not in place.

As a result, the option of trading at any time in the day is more effective with Cryptocurrency than Forex.

Conclusion

Understanding these differences will help you analyze both these markets and help you choose a more convenient and effective platform for you. So acknowledge these points and go ahead to make good use of them by decoding the meaning of the same.

Difference between Crypto Trading and Forex Trading Explained

A Cryptocurrency is a form of currency, but digital. This virtual currency helps you to buy and sell anything you like on the Cryptocurrency platform. Whereas, Forex trading is trading currencies on the internet space, unlike the virtual currency trading. So, here we will be discussing something about the crypto trading as well as Forex trading space. This topic can face a lot of controversy in the coming years for both the traders as well as the investors alike. This will be like comparing oranges and apples when you know both of them are sweet and contains its own benefits. So, without creating any further ado, let us hit the post.

Crypto Trading and Forex Trading

This is just to brush up what exactly does Cryptocurrency trading, and Forex trading means. Those who don’t know, Cryptocurrency trading is trading the currencies but in the form of digital currency form. The crypto market is less than the later one that is mentioned here. Another significant topic we are discussing is that Forex trading includes many third men and traders. This is absent while you trade in the Cryptocurrency market. This is one of the reasons why people look forward to trading in the crypto than in the Forex market. Just like the apples and oranges, these both have their own advantages and disadvantages. Those who are comfortable trading in digital currency go for the former one and those who are comfortable in trading currency goes for the Forex trading.

Forex Trading 

Differences between Crypto trading and Forex trading

Here, we will discuss some of the major differences between the two trading space. While trading in the Cryptocurrency market, it means that you are buying bitcoins or any kind of Cryptocurrency for the long term. The trade value is fluctuating in the Cryptocurrency that makes the people difficult to stand for the long term in the same. However, when speaking of the Forex trading, you have to know the value, and the trading takes place in the OTC space. This platform is absent in the former one. While trading in Forex, you must keep an eye on various factors that can make the value go down or up. These can include GDP, unemployment, and inflation. One has to understand a lot while trading in Forex. Compared to Cryptocurrency trading, the knowledge and understanding one must possess while trading in the Forex trading are more than the former one.

Which is the best space to trade?

After reading all the key points and factors that are mentioned above, there is no doubt that you can feel all confused and doubtful. You must know that these two possess their own positive and negative sides. The way you choose to trade will also influence whether you gain or lose while trading the currency. You must even know the value of money fluctuates. So you cannot rely on only one of the platform f only one of the value. So, before making a decision, you need to make sure that you do proper homework before stepping in.

Gauging the Risks and Benefits of Trading Forex with Bitcoin

The new format of trading takes place through innovative methods, and it is quite essential to understand more about it. One among such new formats is the process of trading Forex with Bitcoin, and today we are here to talk about its risks and benefits. Since many are considering trading in this manner, it is essential that you know the ups and downs before you play the game.

Risks

1. Security Related Risks

The theft from hacking and other related problems are not new to Bitcoin, and they continue to cause havoc to traders. So by using Bitcoin to trade Forex, you are inviting such risks and dealing with it. But if you wish to reduce it, then a broker with insurance protection against theft can seal the deal.

Trading Forex

2. Varying Exchange Rates

As we all know, Bitcoin trades on numerous exchanges, and thus, the rates tend to vary. This particular aspect stands to cause a problem if traders are not aware of which Bitcoin exchange rates the Forex broker is using. As a result, a certain amount of risk can emerge from this direction, and it is vital to acknowledge the same.

3. The Problem with Leverage

As the method of trading Forex with Bitcoin is relatively new, investors who use it are also going to be new traders. For such traders, leverage might be too risky, and if they don’t understand the exposure, then things are bound to get problematic.

Benefits

1. Low Costs

When it comes to costs, trading Forex with Bitcoin teens to make sense. Since it is quite new, brokerage costs are being kept at a minimum, and brokers are trying to attract new clients. As a result, the aspect of low costs enters the mix.

Costs

2. Decentralized Valuations

Cryptocurrencies are decentralized, and that has been benefitting investors to a considerable extent. Bitcoin-related transactions will not be tied to a central bank, and thus, these currencies are free from central geopolitical influence. Hence, decentralization brings in another benefit.

3. Forget Boundaries

Bitcoin transactions do not have global boundaries of any scale, and that reduces challenges and other related aspects to a huge extent. Once traders and brokers come into an agreement and are fine with all that is taking place, then the word “boundaries” will no longer exist.

Boundaries

Conclusion

Understanding both risks and benefits will bring about a difference to these transactions and help you choose the manner in which you prefer to trade. So if you’re considering trading Forex with Bitcoin, you need to acknowledge the impact of these points and then make the most of it. Hence, those were the risks and benefits of trading Forex with Bitcoin.

Pros And Cons Of Trading Forex With Bitcoin

The forex market is the largest financial market in the world, with a daily average turnover of almost 5 trillion. There are a lot of people who trade currencies in the forex market and make a living off of it. However, the forex market is very volatile, and price fluctuations happen by the minute, making it a job for a professional, and for a person who has time for it. If that wasn’t hard enough, now traders are looking towards trading bitcoin in the forex market. Bitcoin is a decentralized cryptocurrency that has been around since 2009, and over the course of a decade, its value has increased manifold; now reaching a staggering rate of 19,260 US dollars for 1 bitcoin. So with such high value it seems like quite the attractive offer, but it has both advantages and disadvantages.

Bitcoin

PROS

  1. Decentralised: Since bitcoin is a currency that does not have a central bank to regulate it, and since it has little to no transaction cost, it is a very attractive offer for traders.
  2. High Leverage: Forex traders often offer leverage for bitcoin traders, and traders with experience can take it to their advantage. However, larger the margin for gain, larger it is for loss as well so the trader needs to be quite careful while dealing  with high margins.
  3. Low Initial Deposit: If the broker is legit and appropriately regulated, they can start the trader with prices as low as 25 dollars. The trader may even be offered promotions like a matching deposit amount.
  4. Low Brokerage: To attract new customers, most forex brokers reduce their brokerage amount to a very low amount.
  5. Security: A bitcoin transaction does not require the credit card information or bank details of the trader, because there is no regulatory bank system. This is a major advantage when it comes to personal and financial security.
  6. Zero Global Boundaries: There are no geographical boundaries in bitcoin trade because bitcoin is a global currency and is not affected by third party events.

Trading Forex

CONS

  1. Exchange Rates: Exchange rates of bitcoin vary based on the website and so forex traders must know what the forex brokers might be using.
  2. US Dollar Rate Risk: Almost all brokers sell their bitcoins for US dollars while receiving deposits from clients. Even if the trader doesn’t take a forex trade position immediately after the deposit, they are still exposed to the bitcoin to US dollar conversion rate risk.
  3. Volatility: Bitcoin rates are highly volatile because of the lack of regulation. This lack of regulation can be easily exploited by unregulated brokers and put the trader to a disadvantage.
  4. Bitcoin Related Security Issues: Bitcoin is a digital currency and therefore if someone hacks into your wallet, it can be gone forever. So it is best to consider a broker who has insurance protection against theft.

Similarities And Differences Between The Forex And Bitcoin Market

Foreign exchange trading (commonly known as Forex or FX) is the exchange of one currency for another in the hope that the value of the traded currency will appreciate in the near future. The forex market is the world’s largest financial market, with an average global turnover of 5 trillion US dollars. Combined with the liquidity it offers, the forex market is one of the best ways to earn a quick buck. Bitcoin is, however, a cryptocurrency that is decentralised: meaning that it is not regulated by any bank or financial institution. Since it is a unit of currency, bitcoins can also be traded: hence its relevance in the forex market. However, there are similarities and differences in the forex and bitcoin market, which will be described below.

Bitcoin Market

Similarities

The first and foremost similarity is that they both deal with a volatile market involving currency, and both depend on modern communication technologies to operate smoothly. Trading in currency means that they are not trading in a tangible commodity. Even though a commodity such as currency cannot actually be granted the title of a ‘digital asset’, it is what Bitcoin and similar financial institutions seek to emulate. Similarly, both the forex and bitcoin market are made up of traders ranging from individuals to multimillion dollar financial institutions, all of whom are trying to make a profit from the volatility offered by the market.

Another big similarity between the two markets is that they require computers and internet for the operation of the market. Even though the forex trade pre-dates the IT age, it would never have been the world’s largest financial market without it. It has become the primary way of exchange in the forex market, while it has always been that way in the case of bitcoin.

Differences

One of the most noticeable differences between the bitcoin and forex market is the nature of exchanges versus over the counter (OTC) trade. OTC trading offers a lot more liquidity than an exchange, but it should be regulated by a broker to avoid foul play. Direct access to the market is possible with an account, but is highly regulated, which is not so in the case of having a broker. This is usually done in the forex market. On the other hand, bitcoin is bought on exchanges, whose rates are fixed.

Another difference is the nature of the currencies itself. Global currencies and cryptocurrencies are very different. The systems in the world that regulate and define the interactions of each currency are well established and have fixed procedures. Cryptocurrencies have almost no such established protocols. Since most cryptocurrencies are decentralised, there is no regulatory body that controls the exchange. This has both advantages and disadvantages in their own way.

Steps to Follow During Forex Trading

The foreign exchange market is also called the Over the Counter market. It is considered as one of the best forms of global investment for all the individual investors, businesses, companies businessmen. In short, it mainly deals with the exchange of currencies of one country from another. When compared to the other investment markets, the foreign exchange takes place on the online platform and also takes care of all the financial needs of the investors, when it is practised and traded in the right fashion.

This 24-hour trading market provides multiple trading opportunities to the people. For instance, the city index, provides a chance for the future direct currencies, either by taking a long-term position of the market or taking a short-term position. This also primarily depends on the value of the currency that is in exchange.

This article is mainly curated for the beginners that are new in the vast ocean of currency trading. Follow the further mentioned steps to simplify the process of foreign exchange trading.

FX trading

FX trading steps

Step 1: One of the primary steps, once you enter the market, is to choose the type of currency out to exchange. Since the market mainly allows for the exchange of money in pairs, it is essential to select the right kind of current, with the options of over 65 current pars. We also recommend the entire beginner to spend their time in first understanding the market and also the currency pairs and their values. This will help in preventing future risks and the factors of risks.

Step 2: The next step is to understand the types of FX trading. There are three leading types of foreign exchanging trading available in the market. They are – City index, CFD and the Forex trading markets. Each one of them is associated with their risks and risk factors, and each one has their own money at stake. For instance, the city index is traded in pounder per unit, and that of the CFD is traded in the unit of the base currency.

Trading

Step 3: The next step is to decide on buying or selling of the currency. This mainly depends on the current trade in the market that is going on. For instance, in the foreign exchange market, it is one currency v/s the other current. Both the currency values comprise the base currency that can be strengthened over the available quote currency.

Step 4: The orders can be stopped off automatically, and a stop-loss order is said to close the prize, which is also lesser than the current market situation.

Step 5: The last step is to learn to close the trade. For this, you have to just the opposite of what you did when you were opening the account – close the tabs one by one, and finally, the trade will be closed with the net profit or loss amount in your account.

The Similarities Between Crypto and Forex Trading

Cryptocurrency and Forex Trading might be two different financial worlds, but they share certain similarities. As unique forms of investments, Cryptocurrency and Forex have been inviting players into the market by helping them make the most of their money. Since both these markets have been putting out similar outcomes, it is vital to understand the similarities and evaluate such aspects. So without further ado, here are the similarities between Cryptocurrency and Forex Trading.

1. The Forces of Supply and Demand

Investors who have traded in both these markets will understand more about the forces of supply and demand and how they can control the market. Be it through Cryptocurrency or Forex; it is the forces of supply and demand that call the shots and eventually drive the market. So, when there is demand for Bitcoin, the price will go up, and when there is a demand for the US dollar, the price will also go up. Hence, a major similarity between these markets is the governing forces of supply and demand.

Cryptocurrency

2. Risk Management

The element of risk management plays a huge role in both these markets and significantly in any form of investment. Without a proper form of risk management, it isn’t easy to operate in the market and trade your currencies with each other. Since it is not easy to know which way the market shifts with each trade, risk management is your tool and one needs to make the most of it. By doing so, you can also hope for profits because controlling risks can lead to returns.

Yes, that’s right. If you are aware of the market and the many changes it incorporates, you can begin to take productive steps and control risks as and when it appears. Once you are aware of these elements, you can trade in an effortless manner and claim your returns at the end of the trading period.

3. The Use of Automation

Trading in both these markets can be carried forward with automation, and that can happen with a software. By setting entry and exit points, stop-loss points, and other such aspects, you can trade in these markets with a software. Thanks to that, automation is another similarity between them, and making good use of the same will also help you manage risks. So if you are interested in automation, you need to conduct research and pick out a tool that suits your needs.

Automation

Conclusion

Differences and similarities are all a part of the process, and exploring their meaning will help you understand the concept in-depth. So whether you’re a Crypto or a Forex trader, you need to acknowledge these similarities and make fair use of this information.

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