Forex market now is more fast-moving than ever. The technology took us to the whole new world of online trading from the comfort of our homes. The limitless news and signal sources make sure that we notice and seize every opportunity. And the appearance of cryptocurrency brought Forex into a whole new light. Today we are going to compare Forex trading vs Bitcoin trading and look into some ways of combining the two.
In order to fully understand how to successfully trade Bitcoin on Forex, we need to start by comparing them and outlining the major differences and similarities. While foreign currency trading has been around for a while, roughly speaking since the invention of money, Bitcoin is a product of the current century.
Many say that cryptocurrencies are the future of finance, but there is definitely a long way to get there. For now all we should focus on is gaining profit from exchanging currencies and cryptocurrencies among each other in the wisest way possible. To benefit from trading Bitcoin there are several things you need to understand about this digital coin, specifically its characteristics compared to usual Forex instruments. Characteristics, like:
Regulation. What makes cryptocurrency stand out the most is the fact that it is not tied to any specific government or Central Bank. Unlike our everyday money, Bitcoins are not backed up by any actual value other than its existence. This is built on the concept of blockchain technology - a series of complex algorithms that involve various levels of authenticity validation. We are not going to get too technical, let’s just focus on our first take away in this Bitcoin vs Forex trading comparison: cryptocurrencies cannot be regulated due to their nature and trading and storing them is virtually not limited by any boundaries. For traders this means that trading crypto elsewhere outside foreign exchange market will have little security, since the transaction is not secured by safeguard agreements, like it would be on Forex.
The main difference between Forex trading vs Bitcoin trading is the amount of steps required to start the process. First you will need to get the Bitcoins to trade. This can be done through creating an online crypto wallet and purchasing the necessary amount from one of the Bitcoin exchange places. While you do that, it is important to ensure that you are dealing with legitimate service providers and companies.
Your next step is going to be opening a Forex trading account with a broker of your choice and specifying that you are planning to trade BTC. Some brokers allow direct Bitcoin pairing with other currencies, while others will give you an option to exchange the cryptocoins to the equivalent amount in USD, EUR, GBP and so on and take it from there. And after the profit is gained, the trader can withdraw in Bitcoins as well. For the sake of keeping this to the point we are only going to consider trading the pairs that involve BTC directly.
There are multiple strategies that address trading cryptocurrency. Most of them base the decision making process on the combination of technical analysis, fundamental analysis and evaluation of the market sentiment. As we have previously mentioned, the direction of crypto’s price movement will largely depend on how the so-called whales - large number holders - behave at the moment.
In order to make sure that you always benefit from a situation, learn to walk away from trading Bitcoin at times when it is not doing so well and bet on other currencies. Another good solution to successfully trading BTC is to learn how to do your own technical analysis and combine in with several trustworthy signal-providers for best results.
At the end of the day cryptocurrency trading success is very much like the success of someone who prefers trading physical cash. You have to always stay in the know on everything in regard to your trading instrument and closely monitor price’s behavior to build your own vision of every situation. Don’t disregard the option of switching between instruments and strategies, but also make sure every shift is well-researched.
If you are new to trading altogether or to crypto-trading in particular - may be give it a go in simulation mode, using an online demo account to work out all your doubts and imperfections. To help you keep your eyes on the prize and maybe motivate you a bit, let’s address how much money you can potentially make through trading Bitcoin.
This is probably the best part of today’s discussion, as there is no limit to how much one can make on Forex. It all depends on three things: your knowledge/skill set, the current situation at the market and ability to keep thinking clearly, no matter what. The latter can be quite a challenge, since on Forex it is your own money that is at stake.
Whenever you feel that the nerves are taking over because the market is going in a very unpleasant direction, remind yourself that you can benefit from virtually any scenario. Even when Bitcoin’s price seems to be reaching new low after another, keep in mind that the state is current and do not make any rash decisions. You can also consider using a Forex compounding profit calculator to get a clear picture of what to aim for in terms of income and productively achieve the set goals.
When comparing Bitcoin trading vs Forex there is no single answer to which is better. The truth is - both are equally challenging and carry a similar amount of risk and potential. Your main task is to figure out what kind of trader you want to be and select the tools that will help you get the most out of Forex trading. After all, what really counts is the result and if you have your own way of getting there - even better.
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