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Cryptocurrency

4 Essential features of Forex and Cryptocurrency

Published

8 months ago

on

Forex Trading

Cryptocurrency Trading

Unlimited supply.

As the Forex market consists of the world’s global financial markets, there is an unlimited supply of currencies available to trade.

Finite supply available.

Limited supply increases demand. Since there is a cap on how many cryptocurrencies can be created, the value often increases. For example, with Bitcoin.

Leverage.

Forex trading allows for leverage of 50:1, meaning you can take a Forex trading position worth $100 for only $2. However, this also means losses can escalate rapidly.

Quick, permanent transactions.

As central banking and other third-party vendors don’t take on transaction fees, cryptocurrencies have low transaction costs.

Very high liquidity.

The Forex has more participants than any other market, so it is quick and simple to trade even large volumes of currencies. One single investor cannot massively influence the Forex like they can with the stock market.

Massive potential gains for investors.

Consider this: $1,000 invested in Bitcoin in 2013 would be worth over $400,000 less than 5 years later. The chance for higher rewards also means larger potential risks.

Influenced by global news, announcements, earnings reports, etc.

This can make it easier to find trading opportunities. Traders plan for these events ahead of time and can use techniques for fundamental analysis that are historically proven.

Available to anyone.

Levels the playing field by providing investment opportunities between parties anywhere in the world. This allows individuals even in undeveloped countries without nearby banking institutions to use and trade cryptocurrencies.

Both Markets

It can have high volatility.

This is both a positive and a negative. Volatility is present in both the Forex and cryptocurrency markets. However, the higher the risk, the higher the reward.  Though cryptocurrencies tend to wildly fluctuate, both the cryptocurrency market and the Forex market can be subject to a huge variation in price in a short time.

Bottom Line

Trading either cryptocurrencies or foreign currency involves a high level of engagement. It requires effective equity planning, proper risk-management, perseverance, and a strong desire to continuously learn. But there’s no doubt trading either of these popular markets can lead to remarkable opportunities for an educated investor.

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