What Are the Benefits of Forex Trading and Cryptocurrency CFD Trading?

Our writers preview and review the various cryptocurrency and forex trading possibilities at the FXCM online trading platform.

Forex trading and cryptocurrency trading go hand in hand. It is easy to invest in either type of asset through online brokers or exchanges. However, each investment has slightly different qualities. Here’s what you should consider before investing. 

Benefits of Forex Trading

Over 180 assets: Forex trading, or foreign exchange trading, involves trading different international currencies for one another, such as the U.S. dollar, the British pound, the Japanese yen, the Australian dollar, and others. There are over 180 different currencies worldwide, though availability varies depending on which forex brokerage you use.

Trillions of dollars in volume: The forex market is one of the largest financial markets in the world, with a daily trading volume of approximately $5 trillion.

High liquidity: High trading volumes mean that forex markets can settle trades quickly and inexpensively, something that is necessary given rapidly changing prices. The forex market is open 24/7, another important fact for investors seeking convenience.

Low limits: The liquidity of the forex market means it is possible to invest relatively little money in the market, often as little as $50. Similarly, fees are often quite low.

Many trading strategies: There are many strategies for investing in forex beyond basic trading or “buying low and selling high.” It is also possible to use leverage and margin trading to earn a profit, though those strategies come with high risks.

Hundreds of years old: The forex market has stood the test of time. The earliest forex services were offered in the 1800s by banks such as Alex. Brown & Sons and Banco Espírito Santos. Retail forex services emerged more recently, circa the 1970s.

International value: Forex currencies are often backed by fiat or government decree. This means that prices are indirectly tied to international industries, politics, and resources—making forex a good choice for investors who keep up with world affairs.

Benefits of Cryptocurrency CFDs

Cryptocurrency CFDs, or contracts for difference, provide a way to invest in cryptocurrency without actually holding those cryptocurrencies.

Thousands of assets: There are thousands of cryptocurrency assets on the market today, the most popular of which are Bitcoin and Ethereum. As with foreign currencies, availability may differ between exchanges.

Moderate volume: The cryptocurrency derivatives market has a 24-hour volume of about $132 billion, according to cryptocurrency analytics site CoinGecko. Though that is considerably lower than forex daily volumes, and though CFDs make up just one part of the crypto derivatives market, that volume is still significant.

High liquidity: Cryptocurrency CFDs can be settled quickly and are not limited by the transaction speed of the relevant coin's underlying blockchain. Additionally, like forex exchanges, crypto exchanges are typically open around the clock.

Low limits: Cryptocurrency CFDs do not typically require large investments.

One decade old: Cryptocurrency trading is considerably younger than forex trading. Bitcoin was created in 2009, and CFD exchanges did not emerge until later, making the market is less than a decade old. Despite crypto's young age, there are several reputable exchanges, and crypto’s cutting-edge nature appeals to some investors.

Various sources of value: Cryptocurrencies get their value in many different ways. Bitcoin, for example, gains its value from competitive mining, while EOS acquired value through an Initial Coin Offering (a fundraiser similar to a stock market IPO). Widespread innovation makes each cryptocurrency a unique investment.

No technical knowledge required: Because CFDs do not offer direct exposure to actual cryptocurrency, CFDs do not require you to learn to manage a crypto wallet. Though this makes CFDs undesirable for investors who want to use their crypto for practical purposes, CFDs are excellent for those who are investing for profit.

Regulated prices: Unlike standard cryptocurrency exchanges, CFDs are subject to traditional financial regulations that ensure that prices are fair.

Trade Both at FXCM

FXCM offers both forex trading and crypto CFDs. They offer 39 trading pairs featuring 14 different forex currencies. They also offer cryptocurrency CFD pairs featuring Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), EOS, and Stellar (XLM).

You can get started at FXCM.com's cryptocurrency page. Australian users can find it here, and South African users click here. 

Risk Warning: FXCM’s service includes products that are traded on margin and carry a risk of losses in excess of your deposited funds. The products may not be suitable for all investors. Please ensure that you fully understand the risks involved.