What’s up everyone, so I’m actually coming at you from my home office today and im going
to talk to you about something that me and my partner have kind of had going on in the
background.
So, obviously the crypto market’s been pummeled.
And we have a lot of followers asking us how were staying afloat and if crypto is the only
thing that we trade, and it’s not!
We also trade forex.
So, today we’re gonna take a look at forex versus crypto, the pros and cons of each and
which one I really think is better in the long run.
Alright so, forex versus crypto.
The first thing that i think we should look at is the hours of operation.
Because forex really kind of changed the world for traders, it’s open from sunday afternoon
until friday afternoon.
The traditional stock market of course is closed at night so this really opened up a
much wider trading period for traders and that was huge.
Crypto is really taking that another step further and they have the first truly accessible
twenty four hour live markets seven days a week.
For somebody just getting into the space that might not mean much, but for established traders
it really is huge to be able to get those extra two days in.
Not just for the trading time but also the ability to manage positions you already have
during those periods.
Now, along with the forex crypto battle we of course have to look at the fact of establishment.
Forex has been around for well over a decade, its an established industry and with that
you have regulations, you have oversight, and that’s one of the big points that comes
with crypto versus forex, is your security.
We see it all the time with crypto, exchanges being hacked, losing money, things like that.
And the reality is, current situation you have no legal recourse.
The nice thing with forex, being that it is established and regulated you have legal recourse
if something goes awry with a broker.
You actually have rules that are in place.
Now, with that and the regulatory issues, the other factor with crypto is that were
so new that really were currently in a place where the way that we trade crypto could very
well drastically change over the next two years as new regulations and laws come in.
If you’re trading the forex markets, its very unlikely that any kind of regulatory
restrictions are going to drastically change the way you trade on a day to day basis.
Okay, along with that regulatory framework that you get with forex, you do get a slight
advantage with crypto.
I won’t talk too much about the logistics of it, but the reality is KYC at this point
is rather extensive in forex, theres alot of information that you have to give t6o be
able and open an account.
There’s a lot of red tape involved with all that.
Crypto isd still in a space where realistically you can actually trade anonymously.
I won’t speak to the legal issues of this, but to some people that does appeal, and I
do understand that.
Okay, so one of my biggest sticking points with crypto, and one of my favorite things
about forex is fee structures.
Because it’s not regulated, because there’s kind of no uniformity right now, you just
absolutely are getting gouged on fees.
Believe me guys, trading crypto when I first started out, I looked at it and I was like
“you’re paying a high fee to get to do what you want to do”.
But the level of excess these fees are is just bonkers, ive seen as high as 3%.
In forex you’re looking at usually your broker taking a small commission plus your
spread which is the difference between the buy and the sell price.
Usually about a pip and a half, which for you crypto heads in perspective is about fifteen
dollars on a lot of a hundred thousand.
I mean the difference is absolutely insane.
Your talking about you know, somewhere in the range of about fifteen dollars versus
three thousand for the same size trade.
It’s pretty clear where the winner on that one is.
The other thing with that established factor is choices.
Crypto has a lot of choices but in a different way.
With the forex market you have tons of options for brokers to trade through, you can go and
look and you can really choose the best one.
With crypto your options are very limited, there’s no real uniformity.
Now, you do get more pairs, there are a lot more combinations of cryptocurrencies that
you can trade and that is appealing to some but, the other downside with that of course
is you’re really delegating everything into a very long only type environment.
Going short is not available on most currencies, its only on a small group of the larger cryptos.
With forex you can trade in either direction, you’re never going to have an issue with
that.
Another issue we see in crypto of course is liquidity.
This is a huge one.
I mean the difference is massive.
Forex isjust trading the global currencies on the market, the average daily volume in
forex currency trades is about five trillion dollars.
Crypto on the other hand, you’re looking between seven and fifteen billion dollars
a day.
That still sounds like a ton of money, but the reality is, I’m no mega whale with billions
of dollars that I’m moving through, and I’ve been in situations where I cant clear
an order through the market because the liquidity simply isn’t there to clear at the price
I want.
And that really is something that’s nice about forex.
Now with that, you’re dealing with less volatility so you’re price moves are going
to be significantly smaller.
And you know, a one percent move in a day in forex is huge.
In crypto you have big moves, big swings, which can bury you, but can also be advantageous
if you’re willing to take higher risk for the chance at higher reward.
There’s always a give and take with this.
Now the way to handle this is through leverage.
With forex you generally can trade with much higher levels of leverage than crypto.
Heck, in crypto finding an exchange that you can go through that offers leverage is rare
at this point.
With FX, you can go sometimes as high as 50 to 100X, i would never suggest that, that’s
extremely high risk, but you can do it.
With crypto you’re basically just going off the volatility of the currency itself
rather than your leverage to make those profits.
Alright so one of the other things that’s very much still in development in the crypto
world is access to usable platforms.
Theres like no uniformity, if you go to each different exchange youre going to be placing
your orders in different ways, it’s going to have a different format for everything.
You know a lot of exchanges don’t offer things that are basic in other markets, trailing
stop, stop limits and things like this, and in forex, you know a lot of people use metatrader
4, it’s kind of like microsoft office for traders in forex.
It’s a uniform program, everyone can link into it, multiple brokers trade through it.
And there’s a lot of uniformity so it’s easier to kind of pick up that skill set to
trade forex across multiple brokers in one place.
With crypto, I mean I trade on multiple different exchanges and there’s no doubt, every single
exchange that I use except maybe binance and kucoin have mirrored formats, they all use
different methods and it really kind of makes it a more difficult space to navigate if you’re
not familiar with it.
Okay, so my last point is the big elephant in the room which I’m sure all my crypto
people are going to bring up.
Investment potential.
There’s no freaking doubt about it, you are probably never going to see a worldwide
currency double, or half in a small tradable period.
It’s probably just not gonna happen barring some crazy wild event.
Crypto, there’s no doubt, it’s a new technology, we don’t know where it’s headed, there
is huge investment potential here.
You know, I’m not gonna deny that, there is huge upside potential.
But the thing with upside potential is you’re looking at equivalent risk.
So if you’re going to take that, you know hope that crypto’s going to go to the moon,
do it.
But remember your risk, and always keep that in mind when you’re trading.
So in the end, forex vs crypto, who wins out?
Honestly?
In my opinion, neither.
There’s a reason that we trade both forex and crypto.
In my personal experience what I’ve found is that I can do better long term analysis
on cryptocurrency moves, most of my positions that I hold in crypto now are usually between
three days to a week or two, because on that scale, you’re really looking at smoother
moves.
Because one thing that happens in crypto alot on intraday, is you will see lots of flat,
and then massive moves.
And the reality is, for day trading, if somethings drops by eighty dollars in two minutes, the
chances of you catching that are extremely slim.
My day trading I’ve really moved over to forex because the markets tend, excuse the
pun, but they tend to trend more.
And you know, that’s just easier for a day trader, you can really kind of pick up on
the intraday moves without worrying about extreme chop, extreme volatility.
So, that’s where I stand on it.
I like to day trade forex, I like bigger positions in crypto.
I do believe crypto has a lot to grow but I think that it’s going to be a very interesting
industry, but obviously you know been hit hard right now.
SO, you know my partner and I have got some stuff going on, he was actually in forex for
many years.
And I’m going to be taking alot of my trading stuff that you guys have seen, and anything
that’s kind of crypto agnostic, and just talking about trading were going to be moving
over to the mydaytradingtutor youtube channel.
So you guys can head over there, and all of my basic trading stuff, talking about indicators
and looking at the forex market also, is gonna be over there.
And we’ll also be ramping up the website which has some very interesting forex products
that you guys should check out.
Anyways, if you liked the video, like, subscribe, and definitely go over check out my day trading
tutor, we’ll be having a lot of new content on trading.