Introduction
There are so many options when it comes to trying to make money from trading that it is easy to become overwhelmed. There are plenty of multi-asset traders out there trading a little of everything from forex and stocks to commodities and cryptocurrencies. However, every trader has to start somewhere, and if you’re just starting, you may be wondering whether to trade forex vs crypto, or something else entirely.
In this article, you will learn about the forex and cryptocurrency markets, the similarities and differences between them, the pros and cons of both markets, and how to choose a broker to trade with. Many traders only trade forex. Some only trade crypto. And some trade both. We will give you the information you need to make a decision that works for you.
The Forex Market
Forex markets experience the highest volume of any market in the world. When people talk about forex trading, they are referring to trading fiat currencies. That is, currencies backed by national banks and used as legal tender in at least one country and sometimes in multiple countries. The worldwide 2022 forex market is worth $2,409,000,000 (that’s $2.409 quadrillion). That amounts to around $6.6 trillion, on average, being traded every day on the foreign exchange markets.
There are around 170 different fiat currencies that can be traded, and the majority of forex trades involve one of a few very popular and frequently traded currencies. The United States Dollar (USD) is traded against another currency in 88% of all forex trades worldwide. What’s more, the seven most popular currencies make up 68% of overall trading volume in the forex markets.
Forex markets are available to trade 24 hours, from Monday to Friday. Most forex trading is transacted through brokers that may be specialist forex brokers, or multi-asset brokers, in which case they will also trade other assets such as stocks, bonds, commodities and ETFs.
Many brokers will allow you to trade forex as contracts for difference (CFDs), which means traders can use leverage to place trades, speculating on price movements in a particular currency pair. It allows traders to potentially make profits on price changes without ever owning the underlying asset, often using more capital than they have. CFD trading is risky but is a very popular way of trading within the forex markets.
The Crypto Market
The crypto market is a little different from the forex market. Most crypto trading is done on either centralised or decentralised exchanges. Centralised exchanges are regulated, need licenses to operate, and have to be compliant with various regulatory authorities. A decentralised exchange, sometimes referred to as a DEX, operates as a peer-to-peer network, where crypto coins can be exchanged without any third-party involvement.
Centralised exchanges are generally more popular as they offer higher liquidity, quicker order execution, and the comfort of a regulated system. However, some traders prefer a DEX as they feel they have more control and privacy, plus fees are much lower or sometimes non-existent.
It must be remembered that when trading crypto, you are no longer dealing with official fiat currency backed by national banks. Cryptocurrencies are not, in fact, ‘legal tender’ anywhere in the world. This can be confusing because owning, trading, and transacting in cryptocurrencies is legal in most countries. It is just that the currencies are not backed by any national government or banking institution, so they are not classified as legal tender in the same way as a fiat currency.
There are some brokers where you can trade cryptocurrencies alongside fiat currencies and other assets. These brokers tend to offer the more popular digital currencies such as Bitcoin, Ethereum, Ripple and Litecoin. Brokers rarely offer crypto trading as CFDs, and when they do, leverage will be much lower than for other assets. Don’t be surprised if a broker willing to offer you leverage of 1:30 on major forex pairs will only offer leverage of 1:2 on crypto pairs.
Crypto vs Forex
While there are some significant differences between trading forex and trading crypto, there are also similarities. Traders of both forex and crypto generally aim to take advantage of short-term investments. They rely on constant price movements in the markets to make a profit. Both forex and crypto traders tend to use a mix of technical and fundamental analysis to try and make a profit. Both assets are affected by real-world events and world news, although the events that impact fiat currencies are very different from those that impact crypto prices.
Whereas major economic and political events impact fiat currencies, the price of a specific cryptocurrency can rise simply because a celebrity tweets about it or links it to something tangible of value. Such as when Elon Musk implies that a particular coin will potentially be accepted in transactions with Tesla in the future. There are, of course, many other differences between trading forex and trading cryptocurrency.
The forex market offers limited tradable currencies, and it is unlikely that the number of fiat currencies will expand much in the future. In contrast, there are now more than fourteen thousand cryptocurrencies in circulation, with more being created regularly. So, there are many more assets to choose from in the crypto space.
While many of these assets will never have any significant real-world value, crypto investors are, understandably enough, always on the hunt for ‘the next Bitcoin’. Identifying and investing in altcoins with the potential to grow, right at the beginning when they are worth very little, is key to making large profits in the crypto markets.
There is also a significant difference in liquidity when it comes to trading forex, as opposed to trading cryptocurrencies. As mentioned, forex trading volume worldwide exceeds $6.6 trillion a day. This means there is a lot of currency changing hands, and it is relatively easy to find buyers, and sellers, to trade forex assets. In addition, fiat currencies have inherent value. They can be widely exchanged for goods and services, at least in the countries where they are recognised as legal tender.
Cryptocurrency is a little different. The most popular digital coins have high liquidity and can be used to pay for goods and services in online transactions. The less popular coins tend to have low trading volumes and consequently low liquidity, making them harder to trade. These less popular coins are also less likely to be accepted by vendors as payment in day-to-day transactions. So, they may have very little real-world value outside of the crypto markets.
Volatility and profit potential must also be considered. The crypto market is highly volatile, which means that the price of a cryptocurrency can rise or fall dramatically. That is what makes it possible to make huge profits (or losses) in a relatively short amount of time. The forex market is more stable, which makes it less risky, but it also means there is less opportunity to take advantage of sudden price movements to make a profit.
How trading is carried out is also something to consider. You can trade forex at a wide range of fully licensed and regulated brokers. Reputable forex brokers offer excellent security, easy-to-use trading platforms, and lots of educational resources. Many offer compensation schemes, negative balance protection, demo accounts, and other features that help you trade responsibly and cautiously.
Even centralised crypto exchanges do not tend to offer the same features as most forex brokers. And decentralised ones offer even fewer. It is fair to say that forex trading is more likely to attract a conventional investor, who is happy to take risks, but within specific parameters. Crypto trading is the preserve of more unconventional traders with a higher appetite for risk. Cryptocurrencies are generally created to bypass the official banking system and create an asset that exists outside of the regular establishment. That is reflected in the type of investor they attract.
How to choose a broker
It is important to remember that both forex trading and crypto trading are complex and high-risk forms of investing. Therefore, choosing a broker or exchange you trust and feel comfortable using is vital. What you look for in a broker will depend on your own needs, preferences, and experience level. Here are some of the things you might want to consider.
Regulation – Forex brokers should be regulated by the official governing body in the jurisdiction in which they operate, such as the Financial Conduct Authority (FCA) in the UK or CySEC in the EU. With crypto, regulation is more complex. Although centralised exchanges are regulated, they will not offer the same level of security and protection as a licensed forex broker, and decentralised exchanges will offer even less.
Costs – Each broker will have a set of fees and charges that customers must pay. Some charge a commission, while others are commission-free and simply make money on the spreads (the difference between each currency pair’s buying and selling price). Crypto exchanges will also charge fees. The cheapest crypto exchanges will be peer-to-peer (p2p) decentralised exchanges which will charge a minimal fee or no fee at all.
Assets available – If you want to trade forex or just trade crypto, you will probably want to go through a specialist broker. If you’re going to trade both, and maybe stocks, bonds, or ETFs, you will want a multi-asset brokerage. Remember, some forex brokers offer trading in cryptocurrencies as well but will not tend to offer the same variety of coins that you’ll find at a specialist crypto exchange.
Customer support – Most brokers offer customer support via email, live chat and sometimes (though not always) a dedicated customer service phone line. Customer support at crypto exchanges may vary significantly from one exchange to another. One of the ways peer-to-peer crypto exchanges keep their fees so low might be by offering minimal support for those using the platform.
Minimum deposit – If you are a new trader with a limited amount of funds to invest, you will want a low barrier to entry in the form of a low minimum deposit. You’ll also want to check the minimum withdrawal, how long it takes to process, and whether there are withdrawal fees if you need to get your money back quickly and cheaply. Some brokers offer a very low minimum deposit but only on a basic account, which may not come with all the features you need.
Education – Many forex brokers offer a lot of training videos, articles and eBooks to help you learn about trading. So do some crypto exchanges. If you are new to this type of trading, it can be very helpful to have a range of educational resources available.
Always be aware of exactly which features you need, given what, why and how you want to trade. Then you can check out what is important to you when researching brokers and exchanges.
Our top forex brokers:
| Broker | Features | Min Deposit | EURUSD Spread | ||
|---|---|---|---|---|---|
 Your capital is at risk
US Clients: No Regulated : Yes
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– Regulated by FSCA, IFSC and FSC |
$10 | ECN 0.1, Standard 1.6 | ||
 73% of retail CFD accounts lose money.
US Clients: No Regulated : Yes
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– Ultra-fast execution from 0.2s |
$100 | from 0.0 pips |
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Your capital is at risk
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 Your capital is at risk
US Clients: No Regulated : Yes
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– Flexible leverage up to 500:1 |
$200 | From 0.1 | ||
 Your capital is at risk
US Clients: No Regulated : Yes
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– 40% New Member Bonus
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$100 | Fixed |
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Europe* CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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 81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
US Clients: No Regulated : Yes
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– FCA (FRN 509909), ASIC, FMA, and FSCA Regulated. |
100GBP/AUD/EUR/USD | variable |
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81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
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 Between 74-89 % of retail investor accounts lose money when trading CFDs
US Clients: No Regulated : Yes
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$200 | NDD 0.09 / Standard 0.69 |
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Between 74-89 % of retail investor accounts lose money when trading CFDs
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 76% of CFD traders lose money
US Clients: No Regulated : Yes
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$50 (varying by Country) | from 1 |
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Up
76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
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 Your capital is at risk
US Clients: No Regulated : Yes
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$5 | From 0.0 pips | ||
 Your capital is at risk
US Clients: No Regulated : Yes
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– CySEC, FCA, FSCA, SCB Regulated |
$100 | |||
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Our top crypto brokers:
| Broker | Features | Min Deposit | EURUSD Spread | ||
|---|---|---|---|---|---|
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76% of CFD traders lose money
US Clients: No Regulated : Yes
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$50 (varying by Country) | from 1 |
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Up
76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
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 Your capital is at risk
US Clients: No Regulated : Yes
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$500 | From 0.6 pips | ||
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Conclusion
As you are no doubt aware by now, there is a lot to consider when deciding whether to trade forex or crypto. Neither is for the faint of heart or the highly risk-averse, and both have their pros and cons. You may instinctively know which is best for you, or you may be convinced by now that you would like to try them both. The most important thing is to do your research and be aware of the best brokers, exchanges, trading tools, and strategies to give yourself the best possible chance of success.