In the past, people willing to invest would either buy an equity in a local company or find a stock market broker in order to invest in a corporation. Nowadays, however, there are many other ‘standard’ choices that are rapidly gaining in popularity. With the rise of Bitcoin in 2017, more and more people are interested in buying cryptocurrencies. On the other hand, with so many online forex brokers, it has never been easier to become a forex trader. All in all, both of these methods of making money have their advantages and disadvantages.
Even though it is quite easy to start on any of these two paths, the truth is that starting out the right way is not as easy as you might have thought. In order to make data-driven decisions instead of plain guessing, you need to get a grip on things that you’ve never handled before. So, you need to start educating yourself on these topics and, in order to do this, you need to have access to various reliable sources. For starters, you should start following reputable cryptocurrency news sites and learning a thing or two about forex trading features.
When it comes to the comparison of the two, it is arguably easier to grasp the forex market, seeing as how it requires you to acquire a lot less technical knowledge. Sure, one may argue that even people with little to no knowledge of the blockchain technology have managed to make a fortune in the world of cryptocurrencies, yet, relying on luck instead of knowledge is a gamble and not an investment. Ideally, you could find a mentor. Someone with enough experience in these fields in order to break down some of the most important industry-relevant information.
The potential for profit
The first thing that comes to mind when speaking about any investment is a profit potential. When investing in cryptocurrencies, a lot of people hope to discover a rising coin while it’s still cheap and then keep it until its price skyrockets. In this way, investing in cryptocurrency would be able to bring you an incredible ROI, seeing as how you could start with modest means and eventually amass a fortune.
A similar thing is applicable to the forex market, as well. One of the greatest misconceptions about this market is that you need to have a fortune in order to make noticeable gains. People claiming that clearly have a superficial knowledge of the forex trading in general. Latest forex platform allows you to use forex leverage, which means that you can work with figures 500 times greater than what you’ve invested.
Position vs. day-trading
Another massive difference between forex trading and cryptocurrency trading lies in the strategy you decide to adopt. You see, forex market is highly volatile, which is why a lot of people decide to go for day-trading instead of position trading. Apart from the danger (or loss of sleep) that comes from leaving your investment in the air overnight, most day-trading losses end at 1% of your total account value, while even the most successful trades end at about 6%. In other words, you depend on a huge number of smaller transactions and might remain profitable even with only 30% of successful trades.
While there are people who dynamically trade cryptocurrencies, there is also a general consensus claiming that in order to really make a splash in this world, you have to A) recognize a growing coin and B) wait for its value to skyrocket. As you can see, this is much closer to position trading. Of course, we have to stress that there are a lot of people out there who day-trade cryptocurrencies and position trade on the forex market.
The ICO phenomenon
The next trend that makes people fall in love with the idea of cryptocurrency trading is the ICO (Initial Coin Offering) phenomenon. This is a high-risk-high-reward scenario in which you discover a cryptocurrency in its infancy and trade your more regulated coins (Bitcoin, Ethereum, Ripple) in exchange for great quantities of this coin. If the coin in question makes it through, you stand to win an amazing ROI. There are reliable sources of blockchain news ,that offer good information about the ICO investments and newest blockchain technologies on the market, so make sure to do some research before anything else.
Diversifying your portfolio
At the end of the day, we already discussed that both cryptocurrencies and forex market allow you to start out with relatively modest funds, which is why there’s no real reason for you not to pursue both. If you don’t trust both of these trends to the same degree, there’s no reason for you to invest in them 50/50. Instead, you can allocate at least a minor part of your assets to the other trend. This helps you diversify your portfolio and, consequently, make it substantially safer.
The last thing you need to keep in mind is that the money you stand to invest does have a potential of making some money on its own, and yet no investment is 100 percent safe. Therefore, do not dip into your emergency savings account or your 401K. As we have already stated, you should only trade with the money you can afford to lose.