For many years, forex had dominated the financial market (and still does) way ahead of stocks, commodities and CFD’S. Then the first crypto currency, Bitcoin, launched on 3rd January 2009. Twelve years down the line, the current total market cap of crypto currency is 1 trillion, beating stocks market cap of 48,567,879.5 million, while forex still topping the charts with about 6.6 trillion USD. However, cryptocurrency cannot be ignored as it is speedily rising. Here we will be talking about the dynamics, differences and similarities.
Similarities
· Technical analysis: if there is one thing both markets tend to share, its charts analysis. This is simply the study and observation of these algorithms known as charts, represented in either bars, lines or candle sticks; with candle sticks being the most popular. the charts are a representation of order flow in the market, and they are techniques used to not only decipher the charts, but also to predict future movements. The theory behind this type of analysis this deals with the poring of previous historical price movements and determine current trading conditions and potential price movement. This is known as price action.
· Fundamental analysis: this maybe in different forms, but in all, the same term this is another major way in which coins/ currencies are traded. This is based on poring over economic data reports and news headlines. In the Crypto verse, it involves tokenomics, use case etc.
· Pairs: just as forex currencies are paired (for example, in the photo above, EUR is paired with USD, hence EURUSD) , so are crypto currency pairs are paired, not only with stable coin , but with other crypto. Some popular examples are: SOLUSDT,BTCUSDT, ETHUSDT etc.
· Use cases: use cases are the purpose of coins, coins usually have use cases; which usually determine the purpose of the coin. For example
Differences
The differences are not very visible, but one cannot indulge in any of the fields with ease without having to do proper research. For example. A forex trader may do well in the aspect of technical analysis, but suck at the fundamentals of a coin and vice versa. Hence, research is still needed. Here are some differences:
· Market cap: the market cap has a huge difference margin. Forex with about 6.6 trillion dollars and crypto currency with about 1 trillion dollars. As a forex and a crypto trader, I must say that the crypto space still has potential to grow from a trillion dollars. The crypto verse is not saturated, and can achieve much more.
· Diversity: the Forex space has two major ways to make money in the space; trading and education. But in the crypto verse? There’s tons of opportunities apart from trading and education. Some of them include: writing, designs, etc.
Terminologies in Forex
· Longs: this simply denotes means buys.
· Bulls: a bulls or bullish market denotes buys too.
· Shorts: this denotes sells.
· Bears: a bears or a bearish market denotes sells
· Orders: these are positions in which traders open position in the marker, either buys or sells
· Leverage: leverage, in simple terms, is borrowed money within a trading account that allows a trader open a position with high contract size with less expenditure.
· Margin: margin is the initial capital a trader needs to put in place in order to open a position
Terminologies in crypto
· Whitepaper: this is a persuasive, authoritative document that explains the purpose and technology behind a project.
· Tokenomics: the study of the economics of crypto tokens or crypto currencies.
· Altcoin: this refers to any coin that isn’t bitcoin.
· Block chain: this refers to a form of record keeping, and the underlying technology behind cryptocurrencies.
· Coin: a representative store of digital value of a given block chain or cryptocurrency network
· Decentralization: financial activities that are conducted without the involvement of an intermediary, such as the bank.
· HODL: This simply denotes “Hold On for Dear Life”. It is a strategy in which you biuy and hold onto the cryptocurrency instead of trading it — — — in hopes that it increases in value.
The forex universe and the crytoverse are all interesting both worlds with numerous opportunities. Education, commitment and consistency is needed to thrive. Like a wise man once said
“Whatever you do, stay consistent, you’d be the best at it”
