What’s up everyone, so I’m actually comingat you from my home office today and im going to talk to you about something that me andmy 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 howwere 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 forexversus crypto, the pros and cons of each and which one I really think is better in thelong run.
Alright so, forex versus crypto.
The first thing that i think we should lookat is the hours of operation.
Because forex really kind of changed the worldfor traders, it’s open from sunday afternoon until friday afternoon.
The traditional stock market of course isclosed at night so this really opened up a much wider trading period for traders andthat was huge.
Crypto is really taking that another stepfurther and they have the first truly accessible twenty four hour live markets seven days aweek.
For somebody just getting into the space thatmight not mean much, but for established traders it really is huge to be able to get thoseextra two days in.
Not just for the trading time but also theability to manage positions you already have during those periods.
Now, along with the forex crypto battle weof 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, exchangesbeing hacked, losing money, things like that.
And the reality is, current situation youhave no legal recourse.
The nice thing with forex, being that it isestablished 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 placewhere the way that we trade crypto could very well drastically change over the next twoyears as new regulations and laws come in.
If you’re trading the forex markets, itsvery unlikely that any kind of regulatory restrictions are going to drastically changethe way you trade on a day to day basis.
Okay, along with that regulatory frameworkthat you get with forex, you do get a slight advantage with crypto.
I won’t talk too much about the logisticsof it, but the reality is KYC at this point is rather extensive in forex, theres alotof information that you have to give t6o be able and open an account.
There’s a lot of red tape involved withall that.
Crypto isd still in a space where realisticallyyou 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 pointswith crypto, and one of my favorite things about forex is fee structures.
Because it’s not regulated, because there’skind of no uniformity right now, you just absolutely are getting gouged on fees.
Believe me guys, trading crypto when I firststarted out, I looked at it and I was like “you’re paying a high fee to get to dowhat you want to do”.
But the level of excess these fees are isjust bonkers, ive seen as high as 3%.
In forex you’re looking at usually yourbroker taking a small commission plus your spread which is the difference between thebuy and the sell price.
Usually about a pip and a half, which foryou 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 inthe range of about fifteen dollars versus three thousand for the same size trade.
It’s pretty clear where the winner on thatone is.
The other thing with that established factoris choices.
Crypto has a lot of choices but in a differentway.
With the forex market you have tons of optionsfor 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 lotmore combinations of cryptocurrencies that you can trade and that is appealing to somebut, the other downside with that of course is you’re really delegating everything intoa 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 isliquidity.
This is a huge one.
I mean the difference is massive.
Forex isjust trading the global currencieson the market, the average daily volume in forex currency trades is about five trilliondollars.
Crypto on the other hand, you’re lookingbetween seven and fifteen billion dollars a day.
That still sounds like a ton of money, butthe reality is, I’m no mega whale with billions of dollars that I’m moving through, andI’ve been in situations where I cant clear an order through the market because the liquiditysimply isn’t there to clear at the price I want.
And that really is something that’s niceabout forex.
Now with that, you’re dealing with lessvolatility so you’re price moves are going to be significantly smaller.
And you know, a one percent move in a dayin 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 forthe 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 muchhigher levels of leverage than crypto.
Heck, in crypto finding an exchange that youcan go through that offers leverage is rare at this point.
With FX, you can go sometimes as high as 50to 100X, i would never suggest that, that’s extremely high risk, but you can do it.
With crypto you’re basically just goingoff the volatility of the currency itself rather than your leverage to make those profits.
Alright so one of the other things that’svery much still in development in the crypto world is access to usable platforms.
Theres like no uniformity, if you go to eachdifferent exchange youre going to be placing your orders in different ways, it’s goingto have a different format for everything.
You know a lot of exchanges don’t offerthings that are basic in other markets, trailing stop, stop limits and things like this, andin forex, you know a lot of people use metatrader 4, it’s kind of like microsoft office fortraders in forex.
It’s a uniform program, everyone can linkinto it, multiple brokers trade through it.
And there’s a lot of uniformity so it’seasier to kind of pick up that skill set to trade forex across multiple brokers in oneplace.
With crypto, I mean I trade on multiple differentexchanges and there’s no doubt, every single exchange that I use except maybe binance andkucoin have mirrored formats, they all use different methods and it really kind of makesit a more difficult space to navigate if you’re not familiar with it.
Okay, so my last point is the big elephantin the room which I’m sure all my crypto people are going to bring up.
There’s no freaking doubt about it, youare probably never going to see a worldwide currency double, or half in a small tradableperiod.
It’s probably just not gonna happen barringsome 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, thereis huge upside potential.
But the thing with upside potential is you’relooking at equivalent risk.
So if you’re going to take that, you knowhope that crypto’s going to go to the moon, do it.
But remember your risk, and always keep thatin 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 forexand crypto.
In my personal experience what I’ve foundis that I can do better long term analysis on cryptocurrency moves, most of my positionsthat I hold in crypto now are usually between three days to a week or two, because on thatscale, you’re really looking at smoother moves.
Because one thing that happens in crypto aloton intraday, is you will see lots of flat, and then massive moves.
And the reality is, for day trading, if somethingsdrops by eighty dollars in two minutes, the chances of you catching that are extremelyslim.
My day trading I’ve really moved over toforex because the markets tend, excuse the pun, but they tend to trend more.
And you know, that’s just easier for a daytrader, you can really kind of pick up on the intraday moves without worrying aboutextreme chop, extreme volatility.
So, that’s where I stand on it.
I like to day trade forex, I like bigger positionsin crypto.
I do believe crypto has a lot to grow butI think that it’s going to be a very interesting industry, but obviously you know been hithard right now.
SO, you know my partner and I have got somestuff going on, he was actually in forex for many years.
And I’m going to be taking alot of my tradingstuff that you guys have seen, and anything that’s kind of crypto agnostic, and justtalking about trading were going to be moving over to the mydaytradingtutor youtube channel.
So you guys can head over there, and all ofmy basic trading stuff, talking about indicators and looking at the forex market also, is gonnabe over there.
And we’ll also be ramping up the websitewhich 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 contenton trading.