Income Artist

Is Crypto Trading More Profitable Than Forex Trading?

Author: Jimmy Barron
3 mins 47 secs

Cryptocurrency is the word of the day when it comes to the future of the economy, particularly among millennials. Although it is not a fiat currency, it is readily available for trading on the foreign exchange market, or Forex for short.

You’ve reached us because you’re thinking about getting into the trading game, but you’re not sure whether you should trade cryptocurrency on a dedicated platform or the fiat kind on Forex for the highest possible returns. Let’s put the issue to scrutiny. 

Differences And Similarities  

Forex trading and crypto trading are alike in many respects. For instance, they are both subject to the high volatility of the market and, in spite of what some may think, they’re not “gambling”.

It’s true that chance plays an important role in trading, but it doesn’t dictate an entirely random result, as it does in gambling. Moreover, they are both a legitimate way of earning money – because no, decentralized is not a synonym for illicit. 

What are some of the differences, then? Well, for starters, Forex is a well-established market, whereas the crypto trading business is relatively new, having existed for less than two decades, and cryptos take the middleman out of the equation, which is probably the biggest plus for traders.

Another key difference is liquidity, of which cryptocurrency has very little, meaning that the scope of things you can pay for with it is significantly limited. 

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The Market Size Element

In November 2021, the crypto market cap rose up to $2.8 trillion in assets, reaching its highest point and increasing more than tenfold in a year. That being said, by June 2022, the value of these assets went back down to $1.2 trillion.

Considering that in 2019, more than $7 trillion were traded on a daily basis, the forex market is in a much better spot. While still volatile at points, the market fragmentation is not so high. This makes forex a much smaller risk of losing your assets. Therefore, it’s potentially more profitable. 

Considering Trading Venues

For the most part, forex trading is done through brokers. These brokers may be individual people or they may be a bank. They will trade the currencies with each other in a process referred to as the “interbank market.”

This is not the case with crypto, as it uses centralized and decentralized exchanges. The exchanges are often done through the app, where the users can stay anonymous while doing their own trades.  Since crypto does not use brokers in a way that forex does, you no longer have to pay as much in commissions.

You just need to pay for the exchange, which can be financially efficient. The problem is that without the broker, you are also at a higher risk of making the wrong trades. This can lead to significant financial losses, especially when you do not have the time to watch every minute of the trade.

The Profit 

Before we talk about the profit, we ought to talk about the speed – or lack thereof – you can earn it with. Forex is a rather long-term affair, but this, as we shall see very soon, isn’t necessarily bad.

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Due to it being decentralized (in other words, not subjected to any government) and traded on the blockchain, cryptocurrency moves a lot faster. 

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Now that we know the profit readiness of both crypto and Forex, it’s time to answer that pressing question: which is more profitable? Crypto is the winner in this race, but there’s a catch-22 that you should be familiar with before you put all your savings into it – crypto trading is a hundred times riskier than Forex trading, because the value of crypto can tank to 0 overnight, as it’s been proved by the recent and ever-worsening Bitcoin disaster

On top of that, it is also contingent on the whims of famous persons associated with it, as seen in the Elon Musk and “Dogecoin” situation – yes, you guessed it, dogecoin is also plummeting lower by the day.  

Conclusion 

We truly believe that Forex trading is the better of the two, even though it is a bit more high maintenance than crypto. It carries a larger degree of safety and guaranteed return.

You can earn some insane amounts of money by trading crypto, but you can also lose absolutely every dime in your pocket in a matter of hours, and that is not the case with Forex. 

If we piqued your interest in Forex trading, you should consider working with a professional broker from FXList