Forex vs Crypto Trading: 30 Similarities & Differences

What are the similarities and differences between forex vs crypto trading? Over and above the concept of stock trading and Foreign Exchange or Forex trading, the concept of trading crypto coins has also gained a lot of traction over the years, and pretty fast.

This has actually opened a new, and perhaps a much better avenue for the interested people to invest money into the financial markets and make handsome returns from their investments.

However, few ignorant people still believe that the mechanics involved in crypto trading and fiat currency trading such as the British Pound and US Dollars are pretty much similar.

Though there are a few notable areas that surely do overlap, it is an undeniable fact that Foreign Exchange trading and crypto trading are not the same.

There are plenty of areas where crypto trading differs from the traditional foreign exchange or forex trading. Check out Differences Between Crypto and Stocks.

Right from the basics of the two markets to the demand and supply of the products involved in trades as well as other economic and allied factors, the list of similarities and differences between forex and crypto trading is pretty long.

If you are not aware of it, here is an article for you to follow. Stepping into this field with such knowledge will surely help you in your venture and to make an informed decision to become a successful crypto trader.

Such distinctive knowledge will also help you a great deal in assessing the best investment opportunity for you considering your individual preference.

This article brings you both the similarities and differences between the more mature Foreign Exchange market and the relatively new crypto trading concept, based on their different components and the aspects of the trading environment.

Forex vs Crypto Trading: Similarities

Forex vs Crypto Trading

Distinguishing between forex trading and cryptocurrency trading boils down to the traditional and modern ways of thinking.

Though at the core, it is all about money, correlating different types of currencies backed by different governments of different countries along with the coding as applicable may seem to be pretty difficult.

However, here are a few similarities between the two types of trades that you should know before knowing the differences between forex and crypto trading and create a real buying power in your day-to-day life.

1. Demand and Supply Maxims

When it comes to the price activity of both forex and crypto markets, it is actually driven by the supply and demand maxims which are typically the most significant canons of basic economics.

This means that in both forex and crypto trading markets, the price of the commodity involved in each will increase when the demand is heightened. On the other hand, the same will fall when demand is less than the supply of specific products in the respective markets.

2. Automated Trading

You can automate your trades in both crypto and forex markets. Typically, you can use specific tools to automate crypto and forex trades such as the trading bots.

This is specialized software that will enable you to determine and set the entry and exit points in the market along with the stop-loss points based on the price and market movements and after proper scanning of the other conditions that may influence the final outcome of your trade.

This will ensure proper risk management in crypto as well as forex trading.

3. Risk Management

In both crypto and forex trading, risk management is vital to be successful since it is pretty difficult to predict the movements of your trades in both the markets.

Proper risk management will ensure that higher profitability is maintained all through the trade.

For this, you will need to make some solid technical and fundamental analysis to be aware of your positions and protect them with stop losses if the market does not move in the desired direction.

4. Platforms

Both the trades, forex and crypto, are conducted online on the internet electronically over distinct digital platforms.

Therefore, it is accessible to all those who are interested and have access to a system and strong internet connection.

There are several digital platforms that allow trading multiple currencies but make sure you choose a reputed and reliable one after proper research.

5. Flexibility

Both, crypto traders and forex traders, have the flexibility to trade from anywhere in the world since both trades are conducted online.

It takes a much shorter time to trade crypto and forex as compared to other traditional trading methods which add to the convenience factor.

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6. Market Understanding

Whether you conduct a crypto trade or go with forex trading, both will need a fair bit of understanding of the movements of the respective markets and its products.

You will also need to have adequate awareness and a specific degree of understanding of the different technical and other allied factors in order to ensure you make lucrative returns.

7. Deposits

In both the types of trading you will need to make a deposit of the required amount in order to start trading the respective products.

However, you will have to deposit the money with the broker for forex trading and usually in your wallet on or off the exchange to trade crypto coins.

8. Market Speculation

You will need to make proper speculation of the market and the prices of the products involved in both the types of trading as a trader.

This will allow you to determine the direction of the prices when you buy or sell a product.

9. Use of Technical Indicators

Whether you are into forex trading or crypto trading, you will be better off with your trades and enhance the chances of making a profit when you use proper technical indicators.

These technical indicators are however similar in name as well as in their operation.

10. Managed Accounts

You as a trader can opt for managed accounts in both crypto and forex trading. This is typically an account where you deposit funds with an isolated fund account.

These accounts are typically traded and managed by professionals who pay out a percentage of the profits made from making trades using your money.

11. Relativity

Strange as it may sound, crypto and forex actually hold relative value to each other and play in concert.

Typically, the forex markets believe that Bitcoin or Ripple are legitimate currencies so much so that the Chicago Board Options Exchange or CBOE has options contracts on offer on them and CME or the Chicago Mercantile Exchange offers Bitcoin futures contracts as of now, which CBOE offered from December 2017 until March 2019.

12. Ebb and Flow

Typically foreign currencies as well as cryptocurrencies ebb and flow in pretty much similar ways. This means that you will need to think about investing in each or either of them in almost the same way.

Of course, you should use different strategies for forex and crypto trading and also study different trading indicators to have a better knowledge to make a more informed trading decision.

13. Market Physics

Forex and crypto markets follow the same physics in terms of basic money. These regulate the movements in both the markets.

This means that when the market indicates that there are fewer buyers and more sellers, it signifies a bear crypto market or forex market.

14. Responsiveness

Both forex and crypto assets respond to resourceful news of market absorption instantly fearing market shocks.

This means that when a crypto whale converts a significantly large amount of his Bitcoin holding into Japanese Yen, for example, there will be talks in the White House to make amendments in the value of a few specific forex currency pairs based in the US.

Forex vs. Crypto Trading: The Differences

From the size of the market to the distinct functionalities of each, there are also a few significant differences that exist between the two types of trades.

Read on to have a clear perspective and to be more informed about these two specific financial trading environments.

15. Time to Trade

You can trade cryptocurrencies 24/7 and for 365 days because the crypto markets never close, even on holidays, irrespective of the crypto exchange you choose to trade over.

On the other hand, trading forex should be done within the specified time frame of the week when the market is open, usually five days a week for 24 hours a day. It is closed on national and other important holidays.

16. Liquidity

When it comes to liquidity, you will get much higher liquidity in a forex market in comparison to even the biggest and most commonly used crypto assets such as Bitcoin.

On the other hand, as of now, a crypto market will have less liquidity in comparison and therefore much lower cash flow compared to any of the traditional forex markets.

17. Volatility

A crypto market is considered to be much more volatile than fiat currencies or forex markets. This is because this market is much newer in comparison to the traditional forex markets. This means that it has little history as compared to forex markets.

In contrast, the forex market does not have as high volatility as the crypto markets. It also has a very long history to back it since it has been there for a long time and has seen it all to be more mature.

18. Daily Trading Volume

If you consider the trading volume, the Foreign Exchange market is considered to be the biggest trading market in the world with a daily trading volume of $5 trillion with its core components being national fiat currencies such as USD and EUR.

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On the other hand, crypto trading which deals with tokens based on blockchain technology is quite nascent as compared to forex trading with a daily volume of just nearly $50 billion.

19. Trading Process

When it comes to the process followed in trading, forex trading usually involves Over the Counter or OTC trading networks. These OTC networks are managed electronically and allow buyers and sellers from all over the globe to make transactions.

Crypto trading, on the other hand, is normally carried over centralized exchanges where the traders need to use a digital wallet for storing their crypto coins and managing the same.

20. Intermediaries

If you are into forex trading you will have to go through a middleman in order to place your trades.

This means that it involves additional fees and commissions in forex trading which you will need to pay to these intermediaries. These fees are quite high and will reduce your profits if you are caught unaware.

Crypto trades, on the other hand, do not involve such intermediaries being decentralized in nature. There is no government authority to oversee and this means that you can save on the fees and commissions that you need to pay in forex trading.

However, there is a transaction fee charged by the crypto exchanges for each trade but this is significantly low. Moreover, if you choose a crypto exchange that allows making no-fee trades, you can save on that as well.

21. Regulation

The fact that the crypto industry is comparatively new and is decentralized, there are fewer strict rules and regulations imposed that it needs to abide by. It is the same all across the globe.

The crypto exchanges only have to make sure that the fund transfers are not made for money laundering or for any illegal activities such as funding terrorism.

However, there are lots of rules and regulations to follow in forex trading as formulated and enforced by the governments of the respective countries in order to ensure that your trades are legal and validated.

22. External Factors

The rise or fall of the forex market as well as the prices of the products in it typically depends on a set of external factors. These include political and economic events, monetary policies of the government, growth rate in the GDP, major announcements and global news.

The price of a crypto coin and the market movements, on the other hand, usually fluctuates within a small time due to negative feedback, market news, specific trading activities of the big players, and other factors.

23. Deposits

When it comes to making a deposit to start forex trading, you simply make a deposit using fiat currencies with a broker.

However, to start trading cryptocurrencies on an exchange, you will usually need to make a deposit in crypto coins. This means that, first you will have to convert your fiat money into a crypto coin and then make the deposits.

Some pure crypto exchanges allow making deposits using crypto coins only that you have obtained beforehand.

24. Pairing

Usually, most of the crypto exchanges do not put the crypto assets in pairs. However, there may be a selected few that will place them in pairs and also offer fiat-crypto pairs even with a rate of exchange that is similar to the rates prevailing in a forex market.

However, in a forex market that is not the case and the product is put in pairs for a specific exchange rate.

25. Effects of Inflation

Usually, the assets involved in crypto trading are decentralized. This means that specific market conditions such as inflation may not affect crypto trading.

This is because in the crypto coins a specific algorithm is used so that the inflation of these coins is decreased normally as and when there is an increase in its supply.

On the other hand, the products traded in a forex market are typically centralized and regulated by the central banks. This means that prices will be affected greatly in forex trading due to inflation.

26. The Demand of the Assets Involved

The centralized nature of the assets involved in forex trading also means that the demand of the assets used for such trading will be much more in comparison to the crypto assets.

This is because these currencies are typically used in their respective regions to buy goods and services. It is a necessity of the people that is usually created by the central banks.

As for the crypto assets, it is not the case. It is usually used to pay for the goods and services by the people who can and to those who will accept it.

Therefore, the demand for it is significantly low since it is confined to a specific community of users. It is a generally accepted fact that people can live without using crypto assets.

27. Pay-Off Terms

Though there is no guarantee of a specific payoff in crypto trading, you will be better off if you choose the long term options over the short term options to gain significant profits.

On the other hand, forex trading is good for those traders who want to make profits in the short term.

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28. Sensitivity

Crypto trading is location sensitive. This means that depending on the location you will be able to use or not be able to use a specific crypto coin that you have gained.

In contrast, forex trading is time sensitive. This means that the price of the product and the market movements can be affected by the different external factors such as economic events at a particular point in time that you have chosen to make a trade.

29. Profit Generation

In crypto trading, profit is usually generated from buying and selling or holding and selling crypto coins, exchange fees, micro-tasking and mining coins.

On the contrary, profits in forex trading are usually generated from the asking and bidding price of the currency, often termed as the ask-bid spread.

30. Anonymity

Crypto trading fosters anonymous transactions by the coin holders. However, recently the ability to make anonymous transactions using top crypto coins like Bitcoin and Ether has been limited due to the intervention by the government.

Still, smaller crypto coins such as Verge, Monero, Zcash, and others still retain this characteristic to hide identities.

On the other hand, forex transactions are regulated by the interbank market. This is the rigid web of financial professionals and forex brokers.

In 2014 they incorporated a new customer identification standard called the ‘Know Your Customer’ or KYC standard. According to this standard, it is obligatory for every trader to provide all personal information in order to access an exchange.

Which is Better – Forex or Crypto Trading?

Just like several other traders, you too may contemplate whether you should invest in crypto or forex.

Since both of these settings have their characteristic pros and cons, similarities and differences, your choice should ideally boil down to your suitability, preference, needs and the trading environment.

Typically, if you are looking for a more mature market that comes with its inherent stability, forex trading will be the right choice for you.

When compared to the crypto markets, a forex market is pretty less volatile and therefore can be considered to have a much higher degree of safety and security.

Add to that, forex trading is typically done in a regulated environment which adds to the security aspect of the traders.

Also, this market has a much higher liquidity in trading as compared to the crypto market because there are some big names involved in it along with a lot of institutional investors.

However, crypto trading, on the other hand, may also offer some significant benefits to the traders due to the fact that the crypto market is new and not as mature as the forex market.

The major coins circulating in the market such as Bitcoin and other Altcoins along with the crypto market on the whole have a huge potential and scalability.

Therefore, if you invest in crypto early, you stand a chance to gain handsome profits in the following years.

Apart from that, cryptocurrencies are known for their higher degree of volatility, and therefore if you are a knowledgeable crypto trader you can leverage this specific factor to make substantial returns on your investments.

Crypto trading also needs less capital compared to forex trading which is why you will typically find large institutional investors ruling the forex trading markets.

However, in the crypto markets, a significant part of it is held by the retail traders as well, much unlike forex.

And, the trading fees in a crypto market are also not as high as those in forex trading which makes it more feasible for a beginner and a common person.

To sum up, choosing between crypto trading and forex trading should not be made on the basis of profitability but rather on the volatility and liquidity aspects. This will enable you to make your choice on the basis of the reward to risk ratio.

Forex trading is good for those patient traders who want a smooth and liquid market while crypto trading is good for those people who are looking for pure growth.

However, always make sure that you consult with your financial advisor if you are a beginner to make the right choice.

And, most importantly, never speculate with your money if you are not willing to lose, irrespective of the type of trading you choose.


Now, with such knowledge regarding forex and crypto trading, you will find that it is much easier to go ahead with your online trading venture in crypto or forex. It will help you to diversify your portfolio which is vital in the given scenario.