Crypto VS Forex

From what can be seen Forex volatility is tiny compared to the Cryptocurrency market. While in Forex, a 10% move considered a substantial change in price, same will not apply to cryptocurrency.

Coins can easily move 100%, 200%, 300% in a day or less, proving a huge profit potential trading with only 1:1 leverage. But if one trades forex with 1:1: Leverage your profit potential is reduced by x10, x20 or x30 times due to lower volatility.

Therefore in order to chase large gains in forex, often 1:10, 1:100 or even 1:500 leverage is used. This brings up a new aspect, such as Margin Call, where all your trades will be closed automatically if a trade goes heavily against you.

When we look at cryptocurrency trading, with 1:1 leverage there is no such thing as Margin Call and your positions will not be liquidated leaving you with 0 or negative balance. When trader buys a certain about of coins, he will always have the same number of coins originally purchased. Yes, the value can go either up or down, but in the worst case scenario trader will lose the value of his coins but not the entire investment.

I find it very intriguing difference where cryptotrading seems more attractive in terms of risk/reward ratio. Considering the growing popularity and volatility of the cryptocurrency, profit potential should grow at the same rate.



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