Ever since the internet went mainstream and reached far corners of the world, investing and speculative trading has become a huge trend around the globe. Suddenly, activities that were previously only available for a small group of people became available to anyone, and from the comfort of their own homes, no less.
As more people started joining in, the number of assets available for trading grew as well. These days, we have binary options, cryptocurrency, commodities, forex, and more.
However, what we would like to do today is to confront crypto trading with forex trading, and see which one is better for speculation.
Crypto vs Forex
As you may know, cryptocurrencies are a relatively new form of money that has only been around for a little over a decade. Considering that money has been in use in one form or another for thousands of years, we can probably get away with calling a 10-year-old asset a new thing.
Cryptocurrencies are decentralized, borderless, and highly valuable. However, they are also unregulated, volatile, and extremely risky. Not to mention that the crypto space is still brimming with scams and scammers, which have robbed countless investors in the past two or three years since crypto trend exploded.
On the other hand, we have forex, or foreign exchange, which is basically trading two traditional (fiat) currencies in hopes of making a profit, should the prices move in the way you expect them to. This is a global market, and it includes pretty much the entire world, and all of its currencies. It is also highly popular, and the most liquid market in the world. In fact, it is so large that it is estimated that around $5 trillion exchanges hand each day.
Compare that to cryptocurrencies, where the daily trading volume sits at around $58.2 billion at the time of writing, and you can see how the entire crypto space is only a neglectable fraction when compared to forex trading. However, does that make forex better?
Which is better?
There is no doubt that there is money to be made in speculative trading of currencies, and that includes crypto and fiat alike. However, what we would like to know today is which of the two is better?
Obviously, speculations are risky, no matter how you try to look at things. That’s why it is called speculation. This is true for pretty much any asset.
Now, when it comes to forex, some estimations say that around 90% of retail traders tend to lose their entire balance within their first half a year of trading. Even so, the very size of the forex market shows that there is lots of money to be made there.
On the other hand, we have cryptocurrencies — a young, still unregulated asset which is known for massive volatility, scams, entire investments lost within a day due to a single mistake, and more. It is also worth noting that only a fraction of the world’s population is using crypto. And yet, its daily volume is as high as $58 billion, and that is right now when the crypto market is far from its best. Earlier this year, when the prices were on a sharp rise, Bitcoin itself had a daily trading volume of over $32 billion, and the crypto market consists of around 3,000 different coins.
In other words, there is clearly money to be made in crypto speculating as well. In fact, cryptocurrencies are performing surprisingly well, when you consider all of the downsides of the market, such as regulatory uncertainty and alike.
So, when we compare the two, what do we get? Both are risky, and both hold potential for major profits. Crypto will likely allow you to earn more, but with much greater risk, as prices are extremely volatile and extremely unpredictable. Forex, on the other hand, offers greater liquidity, it is fully regulated and accepted around the world, and while it is not exactly predictable — it is still more predictable then crypto. However, crypto is tradeable around the clock, it has automated exchanges and a lot of untapped potential.
In the end, it depends on what you are looking for. If you don’t mind greater risks with greater profits, crypto might be the way to go. If you want better chances of making a profit, forex is probably better for you.