Crypto vs. Forex Trading: The 3 Main Differences Explained

  • Crypto vs. Forex Trading: The 3 Main Differences Explained

Forex trading and cryptocurrency trading definitely share some similarities. Crypto merely converts these trades into digital currency, whereas forex focuses on trades centered on conventional financial markets. Therefore, why are the two forms of trading so distinct in practice?


Forex and cryptocurrencies appear to be popular means of exchange powered by highly profitable markets on the surface.

Although the cryptocurrency market hasn't quite reached such astronomical heights, it has grown significantly since the launch of Bitcoin in 2009. Today, daily forex trading volumes exceed $7.5 trillion.

Despite having a capitalization of just $193 billion at the beginning of 2020, the total cryptocurrency market capitalization had soared to almost $3 trillion by the end of 2021, as evidenced by data from CoinMarketCap. This number has dropped to $1.1 trillion in recent months, despite the harsh economic conditions, indicating that the market is susceptible to rapid expansion.

There are many key distinctions between forex and cryptocurrency trading, despite the fact that both options focus on financial assets. Let's examine the three primary distinctions that traders must be aware of when entering the markets:

What Are the 3 Differences Between Crypto and Forex Trading?

There are a lot of differences between the forex and cryptocurrencies markets that traders need to be aware of, but there are some similarities, like the fact that they are influenced by supply and demand.

Before trading in either, it's important to understand these fundamental differences because they can cause significant differences in market behavior.

1. Risks

There is some degree of risk associated with each type of trading. Despite the fact that trading forex and cryptocurrencies has the potential to make a lot of money, there are some key differences between the two markets that can benefit different traders depending on their style and risk tolerance.

Forex trading is generally regarded as offering greater stability and, as a result, a more predictable ecosystem for traders when it comes to anticipating market movements.

Forex prices are heavily influenced by global economic and geopolitical developments. Even though this means that they can be very volatile, they rarely reach the level of unpredictability that cryptocurrency provides.


This makes forex a better option for traders who are more wary of taking risks and a great choice for investors who may want to base their investment decisions on more conventional fundamental analysis.

Additionally, while the cryptocurrency market is unregulated, the forex market is heavily regulated. This makes crypto much more risky and makes asset acquisition much more complicated.

For traders, however, the cryptocurrency market is significantly more unpredictable. Market sentiment can be influenced by a variety of factors in this environment, and a lack of regulation means that scams and fraudulent activity pose a significant threat to traders.

Despite this, investors who are willing to take on greater levels of risk have little reason to doubt the market for cryptocurrencies. Even in the wake of severe market corrections, Bitcoin's value has increased by nearly 40,000 percent since 2010. This demonstrates that skilled traders may be able to outperform forex in terms of profit opportunities.

2. Volatility

The cryptocurrency market is known for its extreme volatility. Bitcoin, on the other hand, has recently shown lower volatility than some traditional markets, so the idea that coins like Bitcoin are wildly volatile may be incorrect.

Smaller amounts of money can significantly alter the market's appearance because the cryptocurrency landscape is smaller than the forex landscape. For instance, if $300 billion were to enter the cryptocurrency market right now, it would alone increase the market's total market capitalization by more than 20%, and we could anticipate significant price increases among the ecosystem's coins.

However, given the substantial trading volumes that are currently taking place on the market, the impact of the same sum entering forex would be significantly less pronounced.

Because this higher volatility is closely linked to risk, some traders are drawn to cryptocurrency because of the incredible opportunities to make more money, while others avoid the market out of fear of big losses.

High volatility can be advantageous or detrimental depending on your risk aversion. Because of the forex market's low volatility, the markets are able to hold up relatively well in the event of an unexpected economic event.

3. Trading Pairs

Trading pairs represent an additional significant distinction. While making an exchange, you're continuously trading one resource for another. Units of value must always be traded, whether this means exchanging USD for a stock or share, EUR for USD, or BTC for ETH.

Forex trading involves trading pairs, and most seasoned traders are familiar with how swaps work. For instance, when making bets, traders make use of seven major currencies, which can leverage 21 different trading pairs.

This simplifies the entire trading procedure. It is possible to log in, locate a relevant exchange rate quote, and execute a trade on many FX platforms.

Because they are speculating on the movement of the exchange rate rather than actually trading currency, traders making a USD/JPY trade need not even have dollars or Japanese yen in their accounts.

Trading Pairs

With cryptocurrency, this is not the case. The majority of cryptocurrency pairs rely on large-cap coins like Bitcoin (BTC), Tether (USDT), and Ethereum (ETH) or a native exchange token like Binance's BNB, despite the fact that cross rates can be easily observed.

More than 29,000 cryptocurrencies are in existence at the time of writing. Swaps between two small-cap cryptocurrencies may be extremely challenging from a liquidity standpoint as a result. This necessitates that funds enter a BTC, USDT, or ETH intermediary, which can result in traders losing time and profits.

Crypto and Forex Trading Platforms

Numerous platforms that can trade forex and cryptocurrencies are available as fintech continues to provide investors around the world with a more comprehensive trading landscape.

1. eToro


Few trading platforms can compare to eToro's extensive selection of cryptocurrency, forex, and stock market options.

It is simple for traders to get started and construct portfolios that encompass a variety of investment options thanks to tools like trailing stop-loss, one-click trading, a rich selection of charts, and zero balance protection.

2. MetaTrader 5


Mobile forex trading is dominated by MetaTrader 5.

MetaTrader 5 is well-suited for risk-averse investors as well as those who are willing to build more ambitious portfolios because it has 38 technical indicators, 44 analytical objects, and a wide range of automated trading options.

3. FxPro


Another well-known name in the trading industry, FxPro offers a wide range of investment options, including stocks and shares, forex, commodities, and cryptocurrencies.

Importantly, FxPro accepts payments in PayPal and Skrill, as well as popular cryptocurrencies like Bitcoin, Ethereum, and USDT. In addition, the platform offers trading features from MetaTrader 5 and its own FxPro cTrader portal with a lot of features.

4. SimpleFX


SimpleFX, which provides trading services to over 200,000 customers in 160 nations, is another platform that has made headlines around the world.

SimpleFX is an appealing offer for traders who want high performance and a wide range of insights for both newcomers to the ecosystem and experienced traders. It also has leverage up to 1:500 and no minimum deposits.

It All Boils Down to Individual Preference

When it comes to choosing between trading cryptocurrencies and forex, there is no right or wrong answer. Despite the fact that the two trading options both represent currencies, there are numerous differences between them, as this article demonstrates.

Before making a decision, you should always do your homework and research your trading pairs, regardless of whether you choose forex or cryptocurrency.

Also, keep in mind that there are a lot of great integrated trading platforms out there, so you can find a good balance between forex and crypto.



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