For some reason, a lot of beginners tend to gravitate towards the currency markets when they first get started. One of the reasons for this might be that money is something people understand more in general than stocks and other financial instruments.
It’s easier for someone who is used to money to understand what could influence its price. Cryptocurrency is another class of asset that is very popular with beginners, and many who invest in the space have never invested in any kind of financial product before. Both of these options do have their benefits for newcomers, but it can be difficult to tell which one is the best. Let’s take a closer look at some of the pros and cons of each, and help you make a more informed decision.
What Are the Pros and Cons of Forex?
One of the biggest benefits in favor of the forex is how liquid it is. There are people trading currencies at all times of the day and if you hold one of the top currencies, you should not have issues selling it. This also means that there are opportunities around the clock to trade.
Another thing that makes forex trading a good option for many is its low volatility. Currency tends to be fairly stable, which means that you might not have to worry about a currency falling off overnight outside of some extreme cases.
But that’s also what makes the forex less interesting to some people. Less movement means that you will have to be more involved and work on making a series of small gains. Being a successful trader on the forex market is tough and some also use very high leverage, this is when a lot of people get burned.
This also means that the forex is not always great idea for some traders over the long term. It can be very hard to make long term predictions on currencies.
What Are the Pros and Cons of Bitcoin and Cryptocurrencies?
Cryptocurrencies share a lot of benefits with the forex. For one, it is also a very liquid market. However, you have to be careful with what you choose, and selling Bitcoins is not as simple as selling dollars on the open market. There can be some delays, for instance. So, while it is a liquid asset, it isn’t quite as much as the currency market.
However, one of the biggest points in favor of Bitcoin is that it has true potential as a store of value. It is a deflationary currency, meaning that it becomes increasingly scarce as it is mined. This means that you should get more buying power with time. While Bitcoin has been behaving wildly, it still seems to have an upward trajectory over its history, and there’s no indication that it’s going to stop soon.
Dealing with the Complexities of Cryptocurrencies
Perhaps the biggest challenge of cryptocurrencies is that you have to get acquainted with a whole new way of doing things. For one, you can’t simply go and exchange your dollars for Bitcoin; there are many things you’ll have to do first.
The first step is getting yourself a cryptocurrency wallet. This wallet is what will contain your public key, which is the “address” your cryptocurrency will be assigned to. It will also contain your private key, which needs to be encrypted. The private key is what will allow you to access your coins. Without it, you will have no way to use them. So, this is something you have to take very seriously.
If you’re looking for a wallet, you can try this Bitcoin wallet from Paxful. The Bitcoin wallet sign-up process is very simple and they state that they are one of the safest wallets you can use online. Paxful also has a peer-to-peer marketplace. Their wallet allows you to quickly exchange coins with people on their networks and get the best price. It also can minimize delays in transactions.
It’s also recommended that you look into a physical wallet in addition to a software-based one. These will allow you to take your private key off the grid, which will make it more difficult to hack. This is a great backup option and you can pick up a great wallet like the Ledger Nano S for under $100. You can then save it in a security box at your bank or a safe.
So, which one is the Best?
In short, if you want to have more chances of trading based on speculation and massive price movement, then cryptocurrencies are a good option. Forex is a good option if you’re ready to put the work in and be very involved with your trades. Crypto, however, is also an option if you want to see your assets value over time.
So, now that you know a bit more about both options, we encourage you to learn as much as you can about the world of trading in general. Being well-rounded is the one thing that can help towards you being able to get consistent results over time. When deciding on the best, it really depends on your own individual needs – thus, make sure you do your research and only trade what you feel happy with.