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Forex or cryptocurrency exchange

Forex or cryptocurrency exchange. Where is it more profitable to trade?

Due to the rising prices of digital assets, the popularity of cryptotrading has increased again. Now traders are actively discussing on which platform it will be profitable to trade cryptocurrency. Should I use a cryptocurrency exchange or stay with a Forex broker? What are the differences between these sites, and where will it be more profitable to trade?

The cryptocurrency exchange allows you to buy real cryptocurrency, which is placed on the trader's deposit. Therefore, the sale and purchase of real digital coins is carried out.

As for Forex brokers, a contract for the difference (CFD) in value is applied here; as a result, the trader's income depends on the correct prediction of the asset's value. There is simply no real turnover of cryptocurrencies here.

Advantages of working with cryptocurrency on a digital exchange

  1. The trader legally owns the cryptocurrency. Even if its value drops, it will also remain on the trader's account.
  2. To make the work convenient and efficient, a variety of assets are provided, of which there are currently over 2 000 tokens.
  3. Here, trading involves arbitrage trading. For example, if several accounts have the same cryptocurrency, then you can earn money using the difference in the value of the asset on different platforms.

Disadvantages of crypto exchanges

  1. Fraudulent platforms are often found among cryptocurrency exchanges, the activities of which are not considered by financial regulators.
  2. Electronic wallets are constantly being hacked, as a result, many traders are left without money.
  3. Assets cannot always be sold, as there are frequent drops in the prices of cryptocurrencies.
  4. You will need a counterparty to open a transaction.
  5. Some crypto exchanges do not work with fiat currencies, so you can only enter and withdraw in cryptocurrencies, which is not very convenient.
  6. Moreover, on some exchanges, if you deposit dollars, you will still only have a digital equivalent.
  7. Reducing risks to zero using a stop-loss order will not work here.
  8. Each site has its own trading interface, which you need to study beforehand and get used to it.

Advantages of working with cryptocurrency brokers

  1. The main advantage here is that the broker's work is checked by the financial regulator. If there is any conflict situation, the person will be able to resolve it by contacting the regulator.
  2. All difficulties related to liquidity disappear. There is no need to look for a seller who will buy the cryptocurrency, since the transaction will be completed at the specified rate.
  3. You can use margin trading. If a trader has a little money in his account, he can take out more funds as a loan and use them in trading.
  4. You can top up your account using a fiat currency. As a result, you do not need to transfer funds through various exchangers and lose some money by paying for a commission.
  5. A trading account is available in dollars, so you don't have to worry about the decline of the cryptocurrency market.
  6. For reinsurance, the trader can use a stop-loss order to quickly close a losing trade at the specified amount.
  7. It is much easier to verify an account with a broker than with a crypto exchange, which imposes stricter requirements.
  8. A forex broker can provide certain assets as a loan.
  9. More useful tools are provided for market analysis, moreover, there are more trading strategies robots can use in their work.
  10. All work takes place on the MetaTrader 4 or 5 platform, which is equipped like all brokerage companies.

Disadvantages of brokers

  1. There are fewer cryptocurrencies available for work, mostly about 10 digital coins.
  2. The trader in this case does not own cryptocurrency.
  3. If a stop loss is not set and the value quickly falls down at a loss to the trader, this will allow the entire account to be reset.
  4. The spread on brokers' cryptocurrencies is lower than that of crypto exchanges.
  5. Swap – the commission charged by the broker for transferring a position to another day. It can be positive and negative. At the moment of a negative step, you can get much less profit.
  6. Of course, Forex provides more opportunities to work. Margin trading, a lot of useful trading tools, technical analysis, the MT4 and MT5 platforms, which make it possible to work comfortably here.