The Forex market contains a wide range of Forex pairs, which may be studied and analysed and can evidence different characteristics, which can depend on market conditions, such as volatility. More liquid pairs may have tighter spreads at brokers. To find the tightest spreads, the trader may look to an ECN broker, but these normally also have a commission charge added to the spread.

Viewed in terms of an asset, Bitcoin is one market, although it has a key role in the cryptocurrency market. Bitcoin is extremely volatile, thus it can show sharp and wide changes in value. Forex pairs tend to move in more circumspect ways, but nonetheless Forex pairs move in complex ways as they trace out movement on the chart.

So Bitcoin can be traded as a pair as well and CFD brokers express Bitcoin in these terms, as the trader is not owning the Bitcoin asset. Each side of a Forex pair of fiat currencies also has a real existence as an asset, simply by having GBP or USD, for example, which has an exchange value when it is converted into another fiat currency.

Because Bitcoin has a value relative to currencies or other cryptos the difference between it and Forex in trading terms is subtle in some sense. One way of expressing it in terms of a trading market, is that Forex tends to be traded on leverage. This is because a relatively large value of a Forex pair needs to be traded to produce a standard lot size. When trading the trader is generally interested in the difference in value between a point in time A and a point in time B.

This can be positive or negative. When trading CFDs, the trader is only trading on this value difference. The trader can go long if they think the value difference will be positive and short if they think it will be negative. Bitcoin does not need to be traded on leverage or as a CFD, and the fact it can be fractioned down to a tiny amount known as 1 Satoshi 0.

There is an analogue in Forex trading, which is micro or even smaller lot sizes or low order sizes. In some sense like a Forex pair, the Bitcoin unit has a relatively large unit value when valued relative to currencies or other cryptos. This has a consequence in trading CFDs in Bitcoin.

As with Forex, the trader is generally only concerned with the value difference and does not own any Bitcoin. But Bitcoin may not be offered in tiny factional sizes at a CFD broker.

So the trader may wish to use leverage. Because increasing leverage increases risk and because Bitcoin is extremely volatile, then leverage has tended to be limited. This has also happened to Forex leverage, but still even when limited Forex leverage is still relatively high.

In essence the role of leverage may be more significant overall in Forex trading than Bitcoin trading. Bitcoin is new emerging around and volatile while currencies have been around for a while and have central Banks which operate to control extremes of volatility. However Bitcoin is more than a digital currency, it is a decentralised payment processing technology the true scope and future potential of which is perhaps not known. Both Bitcoin and currencies are used to make payments. However its role as a payment method is arguably more central to Bitcoin as its aims of being a currency play out.

The way Bitcoin works as a payment method and how Bitcoin exists as an asset are intertwined. While the currencies Forex pairs are based upon have a real existence as well as a digital existence, which is itself referenced to the real existence, Bitcoin has no real existence, if real is defined as the physical world of objects.

Bitcoin exists as quantities in encrypted wallets across the world. Wallets can be online or offline, however offline wallets or paper storage also store encrypted digital information so in a real sense Bitcoin exists as digital bits, hence its name. As a payment method, Bitcoin is transferred from wallet to wallet in accordance with a completed transaction. But how is this Bitcoin moved. There is no central processing system.

This is where the blockchain comes into play. The blockchain in effect 'moves' Bitcoin from wallet to wallet, but in actuality it updates a record which is maintained as a distributed ledger and secured by cryptogrphy hencer the name 'crypto'. The blockchain is a system based around the Internet which operates as an automated system.

The Bitcoin Network itself plays a key role in verifying information to ensure the integrity of the network. But processing itself is done by third party miners, who compete to create a new block of processed transaction data for the blockchain.

The transaction data is a record of a payment from wallet to wallet, with some other information as well. Cryptography comes into play as it is used to securely attach a new block to the previous block. As each succeeding block in the chain is added, the newly minted block becomes more and more secure. However the blockchain itself does not play a role in Bitcoin trading, except in terms of sending Bitcoin from Wallet A to Wallet B assuming a trade happens with real Bitcoin and not CFDs.

Bitcoin trading happens on cryptocurrency exchanges, unlike Forex, which is not traded on exchanges, although its value is based on currency exchanges particularly by banks which are a core part of the decentralised Forex market. However there are a number of cryptocurrency exchanges. It is a very volatile market, which is what pulls traders towards it since it is what brings about opportunities to make money. Now, let us move our focus to the cryptocurrency market. It is perhaps the youngest financial market in the world — only 11 years old — and it deals only with digital assets.

It is open all the time and even though there is the option of OTC trading, most of the cryptocurrencies are channeled through exchanges. After that, there was a fast rise in many different types of cryptocurrencies and the ecosystem flourished. The market is highly volatile, which is considered beneficial by most people. Though the market can be quite susceptible to scams and manipulations, this market is less affected by global events and other financial markets of the world.

There are various ways in which the two markets are similar. Though both of them deal in cryptocurrencies, both markets are volatile and can change within seconds and they rely on the technology of today to operate globally and in the online space. The simplest similarity on whose basis we can compare the two markets is that they both deal with currencies. The markets are also constituted of various players from individual traders to big financial institutions, all of whom are looking to profit from the volatility and conduct businesses and transactions.

One huge similarity between these markets is their dependence on internet technology in their development. Even though the Forex market was here well before the age of the internet, there is no denying that it has exploded ever since its advent, with the internet being the primary way through which one can execute trades.

With the crypto market, everything is in the digital space and nothing could be done without computer networks. Even though there are some major similarities, some jarring differences still prevail between these markets. One of them is the difference between OTC trading and trading on exchanges for Forex and crypto respectively.

The natures of these two are quite different as well. OTC allows liquidity even though it may be facilitated by a broker. One can always get direct access to the market with an account but that usually is very highly regulated. The commission will depend on a variety of things, such as:. Crypto is bought usually on exchanges. The exchange, like a middleman, is going to charge fees. No form of negotiation is entertained, which simplifies the process to some extent.

Cryptocurrencies and global currencies are quite different from one another, something that the votaries of both camps like to point out. Global currencies can be pegged to another asset and are well regulated by banks and governments. Their interaction is dependent on a system that has been around for quite some time now.

Since the s, regular people have had access to financial instruments to trade and thereby giving them some control of their own financial future.

That trading was reserved almost solely and specifically for the regular stock markets — this is not the case anymore. All over the world we now have access to instruments that were previously only able to be touched by the financial elites.

There are limitless amounts of things to access: futures, options, normal equity markets, forex and cryptocurrencies Bitcoin. When forex was introduced as a derivative to trade, it was met with a lot of resistance. In fact, we can still hear or read stories about how forex is not a safe trading vehicle and a scam most of those complaints are regarding shady and unscrupulous brokers.

The newest instrument to trade, and perhaps the most confusing to understand and comprehend, is Bitcoin. FREE Forex Workshop — Sign Up Now! If financial markets and human behavior are examples of how natural patterns repeat themselves over time, then the criticisms of Bitcoin compared to forex are another fantastic example.

If you are a current trader, then you might laugh at how much we hear the same criticisms of forex when it became mainstream as we do for Bitcoin.

And what are those criticisms? But we know that not to be true. Forex and Bitcoin are probably the most closely related trading vessels we have access to. But is one better than the other? Is one safer than the other? Is one better to trade than the other? Take a look at those two above charts.

Can you tell which one is a forex pair or Bitcoin? If we were to put on a price scale you could tell, but with just naked candlesticks we can see that there is absolutely no difference.

Even in this short time span, we can observe the same patterns that are inherent in any market. Common indicators like volume, moving averages, oscillators, volatility indicators work as well in forex as they do for trading Bitcoin and its various pairs. See below. What has happened will happen again and again and again. This is because human nature does not change, and it is human emotion, solidly built into human nature, that always gets in the way of human intelligence.

Of this I am sure. If you want to trade stocks, you have to go through the ASX, NYSE, DAX, etc. Do you want to trade futures? You have to go through the CBOT, CME, etc. Trading Forex and Bitcoin generally have little requirement to start trading and opening an account exchanges for Bitcoin. If Bitcoin and forex can be traded the same way with many of the same common strategies and indicators, what is different about them beyond the technical aspects of trading?

Trading times. Forex and Bitcoin are both the most accessible and open markets in the world. Forex trades from Sunday CST Central Standard Time through Friday CST. Saturday is the only day with no forex trading! Bitcoin and cryptocurrencies in general are different. They are open all the time.

Both forex and Bitcoin pairs offer significant volatility. Volatility is great! However, Bitcoin and other cryptocurrencies are naturally going to have more volatility due to the nature of its infancy as a tradable instrument.

Another reason for the higher volatility in cryptocurrencies is the increased attention it is receiving form sovereign nations. Any little tweet or news blip about Bitcoin is going to send them into a whipsaw.

Forex and many of the platforms to trade forex on have established and prelisted news events that are readily available to the public. Bitcoin is still developing and growing, we may very well see the same economic calendars in cryptocurrencies as we do in forex. And we are still learning what is going to be the most important fundamental and news based information for this very new trading vehicle. But this is no different than forex.

It took a long time for forex to become a respected and safe environment for trading. Are there still shady brokers out there? But the information for the consumer to find reputable and honest forex brokers is everywhere. You are only limited by your own research in finding a reputable and safe broker, the free market is very good at eliminating bad players. The same can be said for the exchanges and wallets for Bitcoin. The pace and speed at which news travels for traders now mostly exacerbates the issue.

Has there been theft? And the longer the exchange and wallet stick around, the more their reputation and integrity will last. There are always going to be risks in online trading, but you get to be the deciding factor in where you put your money and how much you are going to risk. And for good or bad, many more nations regulatory agencies are keeping their eye on the cryptocurrency markets. Thankfully their intervention has been limited to the safety of traders deposits and going after the bad players.

As time goes on, we can expect to see more oversight and protections like forex. This is a tough question because there is no easy or definite answer. Forex is more established and maybe easier to understand to initially open an account where Bitcoin is newer and requires a little more searching. Which is safer? Each trader assumes their own risk and is their own risk manager. Which is better to trade? They both present great opportunities to trade. Before Bitcoin came along, forex was the only truly pure traders market.

Sure, Futures are traded, but there is so much hedging and actual contract exchanges that happen. Forex is a traders paradise. Bitcoin is not beholden to any single nation, no single central bank or multinational compact. Bitcoin is the only trading instrument where the actual supply is bought and sold is not verified by a single exchange or collection of large banks.

Want to trade during the Aussie time but volume is low in the forex market because of a Chinese holiday? Instead of trying to pick one over the other and trying to find out which is better, safer or more accessible, we recommend finding the best fit for your lifestyle, your goals and the future you wish to build. Your email address will not be published.

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Fiat currencies are currencies like USD, GBP and so on. Is Ethereum a Good Investment? Private keys. Differences between Bitcoin and Forex Even though there are some major similarities, some jarring differences still prevail between these markets. Here are a few reasons why you should make this sort of investment: Fluidity Forex is the largest and definitely the most liquid financial market. News Earnings. This is where the blockchain comes into play.

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