Introduction: Crypto vs Forex - The Great Divide
No, forex trading and crypto trading are not fundamentally different for beginners. Yet, forex trading has a more established environment, superior educational resources, regulated markets, and demo accounts that beginners can use to practice. It is also less volatile, making it a less stressful experience for new traders. However, the world of cryptocurrency presents a unique set of challenges that have led many to believe that it is more difficult than forex trading.
The volatility of cryptocurrencies stems from their unbacked nature, unlike most stocks that are backed by the assets or cash flow of a company. This means that the price of a cryptocurrency is driven solely by sentiment and speculation, as each trader tries to sell their coin for a higher price to the next trader. Consequently, traders in the crypto market must navigate this uncertain and high-risk landscape to succeed.
Understanding the Core Differences
Crypto trading involves using cryptocurrencies when trading currency pairs to benefit from the price movements of the cryptocurrencies themselves, as well as the exchange rate between two fiat currencies. The forex market is dominated by brokers, meaning that investors often trade against professionals with more extensive market experience. Traders have limited control over how their trade orders are fulfilled, may not receive the best price, and have restricted access to trading quotes provided only by their selected broker.
The Role of Market Liquidity
The high and uncertain amounts of liquidity in the crypto markets make it difficult to accurately determine trends. Liquidity in a market refers to the ability to buy or sell an asset without causing a significant change in its price. In the forex market, liquidity is generally high, with major currency pairs like the USD/EUR having deep, liquid markets that make it easy to enter and exit trades without causing much price movement.
The Quest for Reliable Brokers in Crypto Trading
For those looking for a trustworthy and reliable broker in the crypto space, HFM stands out as an award-winning choice. As an forex and commodities broker, HFM provides trading services and facilities to both retail and institutional clients. Their commitment to providing the best possible trading conditions and allowing scalpers and traders using expert advisors unrestricted access to its liquidity has positioned HFM as the preferred broker for traders worldwide.
Conclusion: Why Crypto Trading Might Be More Difficult
Although both crypto and forex trading require a good understanding of market dynamics, the lack of established infrastructure in the crypto market can make it more challenging for beginners. The high and uncertain liquidity, combined with the high volatility and rapid price movements, make the crypto market a more daunting experience. However, with the right resources, including forex education and support from reliable brokers, traders can navigate these challenges and find profitability in the crypto market.