Forex trading and cryptocurrency trading are both quite popular, and they are often taken for each other by newbies. With the misconception of the two types of trading, it is evident that most people do not know much about them.
While they both have similarities, such as requiring trading accounts and an internet connection and using charts, they also have differences that set them apart.
Let’s look at some of the critical differences between crypto and forex trading. But firstly, what are they?


What is Forex Trading?
Forex stands for Foreign currency exchange, and according to Investopedia, foreign exchange is the process of changing one currency into another for a variety of reasons, usually for commerce, trading, or tourism. They are traded on what is called the Forex Market.
Currencies trade against each other as exchange rate pairs. For example, EUR/USD is a currency pair for trading the euro against the U.S. dollar.
Since there are such large trade flows within the system, rogue traders have a difficult time influencing the price of a currency because currency trading is risky and complex. This system helps create transparency in the market for investors with access to interbank dealing.


What is Cryptocurrency Trading?
Cryptocurrency trading, on the other hand, is the act of buying and selling crypto coins with the aim of making a profit through the increase in value of the digital currencies.
Crypto trading is done 24 hours a day and all 7 days a week, and they can be traded on a crypto exchange platform or a specialised brokerage. You have two ways to invest from these two ways: trading price movements through cryptocurrency CFDs or by owning the asset itself.


4 Differences Between Cryptocurrency and Forex Trading

1. Volatile Nature of The Market:
When it comes to Forex, the Forex pairs have high daily trade volumes with recurrent movements within narrow bands. This high volatility rate, in contrast with other asset classes aside from cryptocurrencies, is what captivates many traders.
On the other hand, the cryptocurrency market suffers more of it in this aspect. Even in a single trading session in a day, a crypto coin can be affected even by the slightest market movements.


2. Liquidity:
The Forex market is highly liquid, and in 2019, the trading volume surpassed $6.6 trillion. One of the main advantages is that nevertheless your position size, you will be able to purchase or sell your selected instrument easily. Without material slippage, and because of this, you can always back out of the trade at a price that is equal to or very close to the price that you see on the screen.
But this is not the case for most cryptos. The overall market cap of crypto is less than $2 trillion, and Bitcoin takes up over %45 of that. Traders may have difficulty getting out of cryptocurrencies at their desired price since trading is not nearly as active as in Bitcoin.


3. Size of Market:
Forex is a large market, mainly because it is a real-time exchange of foreign currencies dependent on international entities, including companies, banks, investors, funds, and individuals.
Although crypto is still regarded as new compared to Forex, which has been around for quite some time, the cryptocurrency market has made huge strides as blockchain networks have grown. In 2021, the crypto market worldwide was valued at $1.5 billion and is expected to reach $2.3 billion by 2028.


4. Market Hours:
While the crypto market is open 24/7, the forex market is available 24/5. Forex traders have the advantage of stepping away from their screens and charts for a while, but crypto traders do not have their leisure. Because crypto coins usually experience changes in the market on weekends, it is advisable for crypto traders to always be in touch with the markets.


Conclusion
Forex has been in existence for many years, even from the simple barter trade. Although the first crypto coin was launched in 2008, cryptocurrency is still relatively new compared to Forex trading.
People often get these two mixed up, especially when trying to decide which trading path to choose.
Forex and crypto trading has some features in common, but they also have quite some differences.
When picking between crypto and forex trading, you should research and evaluate your financial goals, the risks of both types of trading and which is best suitable for you.

This article is written by Somebody From Breet. Breet is an OTC crypto trading platform in Africa where users can sell their crypto, convert it to cash and withdraw it to their local bank account within seconds.

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Although the crypto and forex markets are similar in some ways, since they are both pushed by demand and supply, they still have some major differences.

This difference varies in market participants, market size, structure, accessibility of assets and more.

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