If you’re wondering whether you should trade bitcoin and cryptocurrencies or forex, you’ve come to the right place. The answer is much more complicated and it comes down to personal preferences as trading opportunities can be found in all markets. Every industry is different and presents different sets of opportunities and analyses.
There is nothing wrong if you’re trading only one asset, however, it’s always for the better if you understand the basics of other markets and pairs. You will be able to make more coordinated and educated decisions, as sometimes they correlate to each other. The experience from forex trading translates to cryptocurrencies and vice versa.
For Forex you definitely need leverage, which can be found on most forex based trading platforms. Leverage is needed for you to make a considerable profit even if the price movements are minuscule.
On the other hand, you have the cryptocurrency market which is highly volatile and trading can be exciting and dangerous at the same time even without the use of leverage to amplify your potential gains.
Bitcoin and cryptocurrencies are much more unpredictable since the industry as a whole is fairly new and it’s only been 10 years since its inception.
Forex on the other side has been here for much longer. It has a history, you can rely on global relations for information that can point to where the price will go. It has much higher liquidity than the crypto market.
You will find a major difference between the working hours of crypto and forex. You can trade forex 24/5, for cryptocurrencies the market is open 24/7 thus imposing no restrictions on the time when you can trade. Trading bitcoin and altcoins is practically unlimited, solving one of the problems of traditional markets like forex, commodities, and stock indices.
Trading Bitcoin and cryptocurrencies in its core is just like trading forex. Trading platforms use the same charting instruments and logic. The main difference is in the volatility and liquidity of cryptocurrency markets which give traders lots of opportunities to profit big if they manage to outplay the market, however, the same applies to losing if the market outplays the traders.
A trader’s aim is to profit from the short term movements of the market. It is important to understand which one is more suitable for you or for the current situation.
Day trading consists of making multiple trades per day resulting in small profits, on two or even more pairs, on one or more than one market. It will require following multiple charts closely at the same time to spot a good opportunity and act fast upon it. Usually, a day trader does not keep his positions open overnight or for a long period of time.
Swing trading involves trading on a higher timeframe and usually, positions are kept open overnight. Unlike the day trading strategy, which requires the trader to constantly be in front of the computer, swing traders can take their time as sometimes it can take up to a few days or weeks for a trade to happen.
Both strategies can be applied in different situations and even combined in some cases, but they require different approaches and presence during the day.
Momentum Trading is a strategy in which traders search for potential moves caused by high volume on the market. Depending on the asset, this strategy can take a long time until correct opportunities come, up to a few weeks to even a few months in some rare cases.
Technical Trading relies on the correct use of charts and graphs, looking at buy or sell signals. This type of strategy can be combined with others that complement each other.
Fundamental Trading is a strategy for the long term where you research the fundamentals of a company or an asset. For example, buying or selling Bitcoin for the long term should be done on a fundamental basis as it has a stronger base and significant events happening around it.
Forex or Bitcoin? The answer is what you make it to be. Start step by step, learn how to manage your capital, learn from your mistakes and get better. It will take time, use it to become profitable in the long term.
Don’t start trading using leverage without any prior knowledge. If you plan to do this just because of excitement from the potential profits – stop!
Start gradually and with the time you will find yourself immersed in trading activities looking at charts and ideas for different markets. We should never limit ourselves to only one market or one asset.