Forex vs Crypto – Which Should I Trade?

If you’re thinking about learning to trade, you may be wondering which assets you should choose to start with. Stocks are great, but you generally need a lot of capital to make good sums of money, so with this in mind, a lot of traders choose to start with either Forex or Cryptocurrency. But which is best for a beginner?

This article explores the two assets and the pros and cons of each so you can make an educated decision of which is going to be most suitable for you.

Cryptocurrency

Crypto is really the baby of the trading world, and the truth is, no-one really knows how it will play out long term. Many analysts believe that eventually cryptocurrency will become more regulated and mainstream (i.e., being able to use it in shops). However, the future of coins like Bitcoin is still relatively unknown.

All we know right now is that many coins make considerable gains very quickly, unlike other assets. Whilst this can make you wealthy overnight and is exciting to trade, this volatility can also be a problem for new traders, and you can lose money as quickly as you gain it.

There are two ways to trade crypto. The first is to buy the asset as you would a stock. There are hundreds of coin offerings to choose from, ranging from fractions of pennies to multiple thousands per coin, so your budget is no barrier. The idea would be to then hold the coin until it’s profitable and sell when you’re happy with your profit.

You can also trade it like you would Forex, where it is paired with a mainstream currency (usually the dollar) and you buy if you think its value against the dollar will increase or sell if you think it will decrease. With this second method you can make money on crypto whether its value is going up or down.

Crypto is extremely volatile and requires a lot of research before you buy a coin to ensure you’re not only getting into a good project, but also at a good time. You don’t want to buy at the end of a bull run, so this research is important.

Forex

Forex is a vehicle which pairs one currency against another and allows you to trade it up or down, meaning you can make money in both directions.

Technical analysis and charting to know where currency is going takes some learning, but Forex is not generally as volatile as crypto unless there is a news release that impacts it (but you can use an economic calendar to gauge when these will be).

With good risk management you can risk only a small percentage of your total account on each trade, making controlling how much you lose much simpler than crypto. Forex is generally more beginner friendly.

Considerations for Both Assets

Getting a good education, charting software and one of these desktop computers for trading are all things you should be prepared to do before making your first trade. These will help you get started on the right foot. 

Forex and Crypto are very different styles of assets, and while both can give good returns, Forex is usually a more beginner friendly place to start your trading career. This doesn’t mean you can’t progress to crypto when you have gained more experience in trading.


About the Author: Joel Aldridge

Having perused an immense volume of job adverts, Joel is on an unwavering mission to guide companies towards enhancing the calibre and quantity of their applicant pool. He fervently promotes the inclusion of salary details in job adverts and emphasises weaving in a company's ethos and optimistic job perspectives to attract top talent.



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