Forex vs crypto

Forex vs crypto

Compare forex vs crypto as we delve into these dynamic and ever-popular trading markets.

Key takeaways

Forex is an established trading market, known for liquidity and earning potential.

Crypto offers new opportunities with high volatility and extended market hours.

Your risk tolerance, trading experience, and goals will determine which is best for you.

Forex vs crypto: A comprehensive comparison for traders

Trading has never been more accessible and diverse than it is today.

As a trader, you're likely familiar with forex, the foreign exchange market, which has been a leading market in the world of financial trading for many years. Recently though, the emergence of cryptocurrencies as a new and exciting asset class has presented traders with a host of fresh opportunities.

In this article, we'll delve into the differences between forex and crypto trading, and help you determine which may be the right fit for your portfolio.

Forex fundamentals

Forex, short for the foreign exchange market, and often simply referred to as FX, is the largest and most liquid financial market with a global trading volume of more than $6 trillion per day.

Forex trading is the exchange of one currency for another, with the goal of profiting from fluctuations in exchange rates. Major currency pairs like EUR/USD (Euro/US dollar), USD/JPY (US dollar/Japanese yen), and GBP/USD (British pound/US dollar) are popular choices for traders, although there are also minor and exotic currency pairs available.

Forex is known for its currency pairs, high level of liquidity, global accessibility 24 hours a day, 5 days a week, and its lucrative earning potential.

To find out more, don't miss our complete guide to forex trading for beginnners.

Key components of forex

What is crypto?

Cryptocurrency is a digital form of currency that uses cryptography (advanced coding and encryption) for security. Unlike traditional fiat currencies issued and regulated by governments, cryptocurrencies are decentralised and run on a technology called blockchain.

Crypto has gained immense popularity and attention since the launch of Bitcoin (BTC) in 2009, which was the world's first cryptocurrency. Since then, thousands of alternative cryptocurrencies have emerged, but only a small portion have enough of a market capitalisation to be meaningful to crypto trading. Some of most popular cryptos for trading include Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Dogecoin (DOGE), and Ripple (XRP).

Crypto is known for its innovative technology, volatile price fluctuations, exponential earning potential, global accessibility, and speculative trading.

Key characteristics of crypto

Forex or crypto: Which is right for you?

The choice to trade forex or crypto depends on your appetite for risk, trading goals, and preferences. There are a few factors to consider.

Risk tolerance

One of the primary considerations when choosing between forex and crypto is your appetite for risk

Market knowledge

The forex market is economically driven, and trading successfully requires a good understanding of the nuances of the macroeconomics, and how changes play out in terms of currency prices across the world.

Forex traders need to understand and monitor:

  • Economic indicators such as interest rates, Gross Domestic Product (GDP), and employment data.

  • Political stability and events like elections, leadership changes or government tensions.

  • Central bank decisions on monetary policy like interest rate changes and quantitative easing.

  • Trade balances of imports and exports.

  • Changes to inflation rates for relevant countries and economies.

  • Market sentiment influenced by news, economic events, and geopolitical developments.

An interest in economics will help forex traders make the most of the market and trade opportunities.

Cryptocurrency is a market more technologically orientated, and less affected – directly – by economics.

Successfully trading the crypto market requires an understanding of blockchain technology and the various fundamental factors that can propel price movements, as well as the indirect influence of the wider global economics.

Crypto traders are encouraged to understand and follow:

  • Adoption rates and use cases such as payments, smart contracts, and decentralised finance (DeFi).

  • Technological innovations, advancements, and upgrades.

  • Regulatory decisions, announcements, and developments in different countries.

  • Changes in market sentiment to news or social media trends. Positive sentiment can lead to rapid price increases, while negative sentiment can trigger large sell-offs.

  • Hacks, security breaches, and vulnerabilities in cryptocurrency exchanges or blockchain networks.

  • Supply and halving events that change supply, scarcity, and price dynamics.

  • Partnerships with financial institutions and institutional participation.

  • Broader macroeconomic factors, such as economic crises, currency devaluations, and inflation, that can drive interest in cryptocurrencies as alternative assets and stores of value.

While a deep knowledge of cryptocurrency and blockchain technology isn’t necessarily a prerequisite to crypto trading, a general interest and understanding can be advantageous when looking at trading opportunities.

Security and regulation

Cryptocurrency is a bit of an oxymoron when it comes to security. While the underlying blockchain technology is one of the most secure inventions of our time, the systems built on top of it are still subject to security breaches. Keeping crypto coins safe and out of the hands of cybercriminals requires multilayered security measures. If you’re going to be trading in crypto coins, security is a key consideration for the safe custody of your coins. As CFD traders don’t take ownership of the underlying asset, this is less of a concern, however, regulatory matters should be considered.

Cryptocurrency is still considered an emerging market, without standardised regulatory guidelines for countries across the globe. Openness to adoption and legal oversight can vary vastly between regions. When choosing a broker to trade cryptocurrency, check credentials and verify their regulatory status and reputation for complying with recommended guidelines.

Forex, being a more established and widely recognised market, benefits from broader regulation and entrenched practices and many regulatory authorities overseeing the activities of brokers and traders.

The bottom line

In conclusion, the choice between forex and crypto trading ultimately hinges on your trading objectives, risk tolerance, and preferences.

Forex, characterized by stability and well-established regulatory frameworks, appeals to those seeking a more traditional and regulated trading environment. Conversely, crypto offers the allure of innovation, higher volatility, and lucrative earnings, but this comes with increased risks and security considerations in a relatively less regulated space.

Diversification across both markets can provide a balanced approach, capitalizing on the strengths of each. Regardless of your choice, responsible trading practices, effective risk management, continuous learning, and thorough research are essential for success in both forex and the ever-evolving world of crypto.


Forex and crypto are similar in that they are both financial markets where you can trade and speculate on the value of currencies, but they have marked differences in volatility, liquidity, accessibility, and regulation.

Neither market is necessarily more profitable than the other. Profitability in either market depends on individual skills, strategies, risk tolerance, market conditions, and other factors. Each market presents opportunities for profit, but also risks for losses, and effective risk management strategies should be applied.

Forex is generally considered safer than crypto due to its higher level of regulation and lower price volatility. However, both markets carry risks, and safety depends on individual knowledge, risk tolerance, and the implementation of proper risk management strategies.

Whether you should start with forex or crypto trading is a personal choice. Consider your level of knowledge, investment horizon, and overall financial situation before deciding which market aligns better with your goals and risk tolerance. Many traders choose to diversify by participating in both markets.

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1 Based on trades for FX Majors with a notional value less than $50,000, on an Advantage, Advantage Plus, or Standard Trading account (MT4 and MT5).

2 Based on Bitcoin (BTC) or Ethereum (ETH) trades with a notional value less than $5,000, on an Advantage, Advantage Plus, or Standard Trading account (MT4 and MT5).