Trading forex or Bitcoin sounds like a revolutionary profit-minting idea. While both are different ways of looking at money, you can build an understanding of trading each to create real buying power.
Learn more about both forex and Bitcoin with our guide.
What is Forex?
Foreign exchange or forex is when a currency like the U.S. dollar is converted into another country’s currency, such as the euro). As simple as it seems, the magnitude of the forex market is just mind-blowing — more than $5 trillion of currency change hands daily in the 24-hour, 5 days per week foreign exchange market.
Governments, businesses and tourists all have diverse needs for foreign exchange, so they use foreign exchange markets or banks to convert their primary currency into the type of money they want.
Trading forex is simply pairs trading. You buy 1 currency and sell another. For instance, if you buy the USD/EUR pair, you’re long the USD and short the euro. Other more actively traded currency pairs include GBP/USD, USD/JPY, USD/CAD, EUR/JPY and AUD/USD.
What is Bitcoin?
Bitcoin is a cryptocurrency developed by Satoshi Nakamoto, whose identity is still unknown to date. You can compare Bitcoin to an online version of cash. The physical bitcoins you’ve seen around in photos are a novelty — the crypto would be worthless without the private codes printed inside them.
Each Bitcoin transaction is recorded in a public list known as the blockchain. This makes it possible to track the history of bitcoins in order to stop people from making copies, spending coins they don’t own or undoing transactions. Digital wallets store private keys needed to authorize blockchain transactions.
Pros and Cons of Forex
Forex may seem safer than currencies beholden on code, but you still need to understand what you’re getting yourself into. Here are some pros and cons that will help guide your decision.
|Accessibility: The forex market is one of the most accessible markets for traders
Leverage: Access to leverage in forex can be the difference between small and sizeable gains
Easy short selling: Traders can easily sell one currency and buy another paired with it.
Liquidity: Being the largest market globally by volume, there’s ample liquidity.
Minimal price manipulation: The currency market isn’t easily influenced by insider information.
|Volatility: Forex traders may be exposed to extreme volatility
Barriers to entry: The bulk of currency trading is largely done by banks, hedge funds and large financial institutions.
Fees: Trading currencies may attract high fees and costs depending on your broker.
Market shocks: Unexpected market and political events can shock the currency market.Scams: The forex trading market is marred with frauds and scammers.
Pros and Cons of Bitcoin
The thrill of riches from Bitcoin is both a draw and a worry. Consider these pros and cons before investing in this rapidly changing currency landscape.
|Security: Through blockchain technology, Bitcoin seeks to ensure transactions are recognized and stored on a public ledger.
No inflation risk: Bitcoin avoids the inflation risk since it’s supply is capped at $21 million.
Portfolio diversification: Bitcoin may provide a measure of diversification depending on your risk tolerance.
No 3rd parties: Bitcoin transactions are peer-to-peer on the blockchain.
|Volatility: The Bitcoin price is based on demand and supply from investors, so prices can change dramatically.
Market manipulation: The lack of transparency leaves bitcoin susceptible to market manipulation.Hacks: Blockchains aren’t impervious to malicious actors.
Minimal regulation: The Bitcoin market is largely unregulated — investor protection isn’t guaranteed.
Limited use: Bitcoin is yet to gain acceptance by most online merchants.
Cost to Trade Forex
The cost to trade forex largely depends on your broker. For each trade you place, you’ll have to pay a certain amount in commissions or fees for each trade you place with your broker. Common forex trading costs include:
- Rollover fee: The rollover fee is the interest your broker charges for holding positions overnight.
- Currency conversion charges: You may incur a currency conversion charge if you forex trade in a currency other than your account’s base currency.
- Inactivity fee: Your broker may charge an inactivity fee if no trading activity occurs in a given month.
Cost to Trade Bitcoin
Cryptocurrency exchanges charge a trading fee when you buy or sell bitcoin. For instance, Coinbase charges about 0.50% for cryptocurrency purchases and sales. You can also expect to incur charges when performing a cryptocurrency conversion like Bitcoin to Ethereum. A good example is Coinbase that charges a spread margin of up to 2% for cryptocurrency conversion.
Other fees for trading Bitcoin include:
- Maker fee: This is the fee you incur for placing a bitcoin order that doesn’t fulfill immediately.
- Taker fee: The fee incurred for placing a bitcoin order that fulfills instantly.
Best Online Brokers for Forex
There are a ton of online broker options to trade forex, but they may not all align with your trading goals. Your success in forex trading may boil down to the broker you choose. Here are some of our recommended brokerage platforms to trade forex.
1 Minute Review
FOREX.com is a one-stop shop for forex traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for brokers searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com’s extensive education and research center that provides free, informative forex trading courses at multiple skill levels. While FOREX.com is impressive, remember that it isn’t a standard broker.
- MetaTrader 4 users
- Beginner forex traders
- Active forex traders
- Impressive, easy-to-navigate platform
- Wide range of education and research tools
- Access to over 80 currencies to buy and sell
- Leverage available up to 50:1
- Cannot buy and sell other securities (like stocks and bonds)
$100 USD (or equivalent)
1 Minute Review
HYCM is 1 of the world’s leading forex brokers, offering investors access to over 69 unique currency pairs. However, forex isn’t the only thing the broker offers — HYCM also offers high rates of leverage, stock and ETF trading, commodity investing and much more. Getting started with HYCM is quick and easy, and most investors can open an account in as little as 10 minutes.
HYCM offers a varying fee structure, which allows investors to choose the spread option that’s best for them. A wide range of educational and investing tools are available, which can be equally beneficial to both experienced and novice traders. Though HYCM isn’t currently available in the United States, it can be a great choice for residents of the other 140 countries where it offers service.
- Investors who want a customizable fee schedule
- Traders comfortable using the MetaTrader platform
- Islamic traders who need swap-free accounts that don’t build interest
- Wide range of currency pairs available
- Excellent selection of educational tools
- $0 deposit and withdrawal fees
- Not currently available to traders based in the U.S.
1 Minute Review
A fully regulated broker with a presence in Europe, South Africa, the Middle East, British Virgin Islands, Australia and Japan, Avatrade deals with mainly forex and CFDs on stocks, commodities, indexes, forex, cryptocurrencies, etc. This brokerage is headquartered in Dublin, Ireland and began offering its services in 2006. It offers multiple trading platforms and earns mainly through spreads.
- Advanced traders
- Traders looking for a well-diversified portfolio
- Controlled by regulatory agencies of multiple countries
- Choice offered in terms of trading platforms
- Support available in 14 languages and trading platforms in 20 languages
- Practice/demo account available for trying out
- Breadth of trading assets
- Does not accept customers from the U.S. as it isn’t regulated in the U.S.
- Transferring funds to the account may take up to five days; withdrawals could take up to 10 days
1 Minute Review
Billing itself as the world’s 1st eco-friendly broker, CedarFX makes it easy to trade and give back to the planet. You can choose a 0% Commission Account or an Eco Account — or open multiple accounts to meet all your needs.
CedarFX offers access to a wide range of tradable securities, including stocks, futures, major and exotic forex pairs, cryptocurrencies and more. Though CedarFX could introduce a few additional educational resources, the broker remains a unique option for traders invested in giving back.
- Forex investors
- Investors interested in 0% commission or eco conscious trading
- Investors looking for 24/7 customer service
- Allows users to offset their carbon footprint
- 0% commission investing
- Offers demo account access
- 24/7 customer service available through live chat
- Eco Account Option (10 trees planted for each lot traded)
- Fast deposits/withdrawls with Bitcoin
- Limited number of educational resources for new investors
1 Minute Review
Vanuatu-based LegacyFX has been in business since 2012 and has won multiple awards worldwide for its brokerage services. The broker uses the popular MetaTrader5 (MT5) software from MetaQuotes as its trading platform and benefits from all of the usual MT5 features, including automated trading.
In addition to forex trading, LegacyFX gives you access to trade contracts for difference (CFDs) on spot gold, oil, cryptocurrencies, indices and stocks. LegacyFX has extensive resources for beginning traders and offers a variety of account types to fit the needs of traders at all levels of experience.
LegacyFX provides its clients segregated accounts with negative balance protection, as well as free trading tools like indicators and trading signals. The broker also offers copy trading and algorithmic trading services. LegacyFX does not accept clients from the United States or Canada.
- Forex traders that want access to trade CFDs in multiple asset classes like spot gold and cryptocurrencies.
- International traders benefit from LegacyFX’s platforms and interface that can be accessed in English, Spanish, Arabic, German and Russian.
- Beginning traders can take advantage of introductory educational resources through beginner to advanced trading courses.
- MT5 trading platform
- Accounts have negative balance protection and segregated from company assets
- Over 200 trading instruments
- Basic and advanced educational resources for traders at all levels of experience
- Does not accept clients from the U.S. or Canada
- High minimum deposit
Best Online Brokers for Bitcoin
Different online brokers carry different strengths — you must figure out the broker that best suits your bitcoin trading aspirations. Here’s a list of some of the popular and more reputable options.
1 Minute Review
Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.
You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.
Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.
- New cryptocurrency traders
- Cryptocurrency traders interested in major pairs
- Cryptocurrency traders interested in a simple platform
- Simple platform is easy to operate
- Comprehensive mobile app mirrors desktop functionality
- Coinbase Earn feature rewards you with crypto for learning about available coins
- Higher fees than competitors
1 Minute Review
eToro, headquartered in Cyprus, England and Israel, has provided forex products and other CFD derivatives to retail clients since 2007. A major eToro plus is its social trading operations, including OpenBook, which allows new clients to copy trade the platform’s best performers. Its social trading features are top notch, but eToro loses points for its lack of tradable currency pairs and underwhelming research and customer service features
- U.S.-based cryptocurrency traders
- Social and copy traders
- Simple user interface
- Community engagement and following other traders
- Expansive network of social trading features
- Large client base for new traders to imitate
- U.S. traders can only buy cryptocurrency
- Only 15 cryptocurrency pairs available
1 Minute Review
Gemini is a cryptocurrency exchange and custodian that offers investors access to 26 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.
Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Gemini’s mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader.
In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.
- New investors looking for a simple mobile and web app
- Experienced investors who need a more advanced platform with more tools
- Users looking for a 1-stop-shop to buy, sell and store all of their coins
- Easy and quick signups — can get started in as little as a few minutes
- Multitude of platforms to accommodate traders of all skill levels
- Hot wallets include insurance to protect your from theft and hacking attempts
- Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app
1 Minute Review
Voyager is a leading name in the sphere of cryptocurrency investing, giving you access to over 50 tokens and coins. Buy, sell and swap assets using Voyager Crypto’s simple mobile platform available as a free download for iOS and Android users.
When you invest through Voyager, you’ll pay nothing in commissions, which is a major benefit when compared to other cryptocurrency brokers. Voyager is also one of the only brokers we’ve seen that allows users to earn interest on their crypto investments.
Though the broker could do more to improve its customer service, it’s an excellent option for beginner investors and seasoned professionals alike.
- Cryptocurrency investors looking for a wide selection of supported projects.
- Investors who prefer mobile trading.
- Anyone interested in earning interest on their crypto investments.
- Simple, straightforward and intuitive mobile platform
- Wealth of investment opportunities
- Allows users to earn interest on select crypto investments
- Only available for mobile users — no desktop platform
- Limited routes to contact customer service team
What’s Your Endgame?
The forex vs. Bitcoin stalemate never seems to end, probably because both carry an intriguing risk-reward dynamic.
If you’re looking to rack up quick profits from a largely speculative asset, then bitcoin may be a good play. But remember, both investing options are just as profitable as they are inherently risky. Be sure you understand each market before making an entry — and if you must speculate — only play around with money you can afford to lose.
Frequently Asked Questions
Is forex better than Bitcoin?
Analyzing forex and bitcoin is the first step toward investing in the digital market, but is one better than the other? Well, it all comes down to your strategies, goals and needs.
Sure, forex is considered more stable than Bitcoin, but Bitcoin can provide quicker and higher profits. You may also want to incorporate both for a more diversified portfolio.
Is Bitcoin riskier than forex for trading?
Trading Bitcoin is riskier than forex trading since Bitcoin is a largely unregulated currency that displays violent price moves, not forgetting its speculative nature. The caveat is that forex is a developed market where you’re squaring it out with a syndicate of hedge funds and large banks that can manipulate prices.
Either way, both markets carry risk. The way you mitigate those risks is what matters. Start by obtaining the relevant knowledge about both markets as well as understanding your risk appetite.
Gemini builds crypto products to help you buy, sell, and store your bitcoin and cryptocurrency. You can buy bitcoin and crypto instantly and access all the tools you need to understand the crypto market and start investing, all through one clear, attractive interface. Gemini Crypto Platform offers excellent account management options. You can manage your account at a glance, view your account balance 24-hour changes and percent changes. Get started with Gemini now.