Home » Headline, Investing

Why Trade Forex when You Can Trade Cryptocurrencies?

26 March 2018 No Comment

When it comes to online trading, there have been a number of ways that retail traders have tried to make a decent return on their money.

The most traditional method was to trade Forex pairs. Traders would open accounts at Forex brokers, take on leverage and use a number of tools to try and get an edge on the market. They tried to take advantage of numerous different forex pairs globally.

Some of these traders did well. Some made large returns. Yet most tended to not be profitable. This mostly came down to the fact that they were mostly small fish in large and unfair financial markets. Those who had the most capital had more say in how the markets moved.

This was until cryptocurrencies came onto the scene. These instruments could be traded by a whole host of different traders with varying degrees of capital available. Finally markets could once more be levelled out and those with the best strategies could make good returns.

In this short post, we will take you through a number of reasons why you should consider trading cryptocurrencies instead of Forex.

What Are Cryptocurrencies

Quite simply, cryptocurrencies are digital cash that are records of transactions on a large decentralised network called the “blockchain”. This blockchain is governed by mathematics and cryptography.

There is no central authority that controls it and it is distributed across a large network of nodes. There is also a limited number of these coins in supply and they are produced by a host of computers called the miners.

Cryptocurrency started with the first example as Bitcoin in 2009. However, since then it has proliferated exponentially as numerous other coins in their own ecosystems and blockchains have been created.

How to Trade Crytpcorrencies

Before you can start trading cryptocurrencies, you have to set up an account at a broker that allows you to trade a range of different cryptocurrencies. Currently there are quite a few that you can make use of.

The most important thing to consider is the regulation and the protections for the trader. One of the most well regarded cryptocurrency brokers that you should consider is that offered by IQ Option. They are regulated in Europe, have a range of different cryptocurrencies that you can trade.

If you would like more information on them then you can read this IQ Options cryptocurrency review. They also offer you the benefit of a free demo account that you can try out for as long as you want and until you are fully comfortable.

They also allow you to trade these cryptocurrency CFDs 24 hours a day and 365 days of the year. Cryptocurrencies are one of the assets that are not governed by market hours and can be traded over the weekend or holidays.

Volatility Much Higher

When compared to traditional Forex, the volatility on cryptocurrrency is known to be incredibly high. When people talk about the movements of these coins, they don’t talk in percentages but in how many times (x).

In other words, some of these coins have the potential to appreciate by more than 100% in a week. This means that the trader can make quite an attractive return without having to rely on leverage. Hence, the trader does not risk losing more than they have invested.

Cryptocurrency volatility is also quite easy to spot. Often times, it will react to market news quite violently. This news is often easy to track and react to in time. This is unlike with Forex when the news is acted on within milliseconds by the high frequency trading algorithms at the banks.

Long Term Technology Plays

On the other side, even though the cryptocurrencies are really volatile, they are long term plays on the underlying technology. This technology is constantly improving and increasing global adoption at an amazing rate.

Even if you are unable to make the short term gains that you may require on a daily or weekly basis, the annual trajectory of cryptocurrencies is still quite unprecedented. For example, over last year the price of Bitcoin went from $900 to over 15,000.

Are there any traditional currencies that are able to give you these returns realistically in only one year?

Opportunities for Risk Management

You can also effectively manage your risk when trading cryptocurrencies by using derivatives. These are able to protect your position even when there is a downturn in the market.

Derivative instrument such as Bitcoin Binary Options are the most effective to manage this downside risk. These options can be bought with a define premium. One can think of this as insurance and the amount that you pay for this insurance is the “premium”.

In the case of protecting your cryptocurrency trades from a downturn in the cryptocurrency markets, then you can use something called a PUT option. This is essentially an option that will pay out when the price of the cryptocurrency falls in price.


Cryptocurrencies are indeed one of the most interesting technological developments of our lifetime. They allow us to be in charge of our finances and empower the world to transfer value without the use of banks.

They are also one of the most effective ways for traders to make great returns over a relatively short period time. The long term trajectory of cryptocurrencies is indeed quite alluring

Quite simply as the day trader there is no forex pair that can compare to the potential that one can earn with cryptocurrencies.

Comments are closed.