Cryptocurrency, Forex and Stock Trading: Their Characteristics and Differences

Many people may have some ideas of how trading forex, stock, or cryptocurrency works, but they do not really understand the characteristics and differences of each market. In this article, these markets’ main differences and how to trade them will be explained and analyzed.

Stock, Forex & Digital Currency Markets each have something unique

Traditional Stock Market

The traditional stock market is the most well-known of these three markets for neophytes. It is open five days a week except for Saturday and Sunday. It features a daily raising limit, low market volatility, and high transaction costs. Moreover, neither the use of leverage nor short selling is possible. This market can easily be manipulated by major investors.

Forex Market

The forex market is also well acquainted, and favored, by investors. It is also open five days a week, 24 hours a day, but has no raising limit and a daily average market volatility of 1% (anything over 1% is considered very volatile). This affects the arbitrage space. It boasts low transaction fees, allows the use of leverage that, however, cannot be changed once set, and supports long/short trading. The cost of manipulating this market for major investors is very high, making it generally impossible to affect medium and long-term investors.

Bitcoin Derivatives Market

The Bitcoin derivatives market is the newest but most rapidly developing of the three markets. The digital currency & derivatives market’s main features are its seven trading days a week 24 hours a day, absence of raising limit, and a high daily average market volatility (1%-10%). It is especially suitable for small investors for short-term fast arbitrage. Moreover, it boasts relatively low transaction fees and supports long/short trading. It is more open and freer compared with the stock and forex markets.

As opposed to the much more experienced and famous stock and forex markets, the crypto and Bitcoin markets are relatively new, yet unregulated, and not as big, but they also offer much higher earning potential, are easier to enter, as a growing number of assets, and has seen a user base grow by +30% per quarter in the last couple of years making it the fastest-growing market by far.

Comparison of Stock, Forex & Crypto Markets