Why More and More FX Traders are Becoming Crypto Traders

Data & Research / 18.08.2020

Over the years, Forex trading has become an extremely popular way for traders to invest their money. The field is changing very fast and new trading instruments are added to this market every day. One of the new trading instruments that are very popular among traders is crypto, which has already changed a lot of things in the world.

A few months ago, Financial Conduct Authority of the UK, better known as FCA, published a study, according to which, the number of investors using the crypto market has jumped sharply over the past year. According to the research, 2.6 million investors in the UK have bought crypto at some point. This number was just 1.5 million last year, which means that more and more people are interested in crypto every year.

Also, the study showed that a huge majority of the investors, 83% of them, purchased crypto on offshore companies, and more than a third of the people who have used crypto at some point noted that they were influenced by advertising in buying crypto.

Most of the traders using crypto have claimed that they have some type of information about crypto trading, they are knowledgeable about lack of regulatory protection and understand how risky it might be.

Because of such risks that come with trading crypto, more and more countries are coming up with new regulatory frameworks that could create a much safer and secure environment for traders. FCA of the UK has noted that they are working on new guidelines, and the regulatory body of Canada also stressed that a new framework is on its way.

What is Forex trading and why is it so popular?

Forex market is a global decentralized market, which is used every day by millions of investors around the world. The Forex trading market determines foreign exchange rates for every currency, the market includes every aspect of buying, selling, and exchanging currencies.

While trading currencies, there are three types of them you can use. Major currency pairs, Cross currency pairs, and Exotic currency pairs. Major pairs are the ones that are made up of USD and one other major currency, such as EUR, CAD, etc.

Cross pairs are major currency pairs, without USD, these pairs can include: EUR/CAD, EUR/GBP, and many others. Exotic currency pairs are the ones that are made up of non-major currencies and USD. For example, USD/TRY, USD/HUF, and many others.

For successful Forex trading, it is very important to find a safe and secure FX broker. A lot depends on the broker that traders are using, and every investor needs to be sure that they can stay as safe as possible while trading Forex. Also, every investor must know at least the basics of Forex trading to have a successful experience.

For Forex trading, whether it is with crypto or regular currencies, traders must have enough knowledge about the market to have success.

Cryptocurrencies & Forex market

At first, it might be a little intimidating to invest using Bitcoin or other cryptocurrencies, the main reason for it is that the regulations do not work the same way for crypto trading as it works for regular Forex trading.

However, in recent years, crypto trading has developed a lot and as of today, it has the ability to be a very safe and secure investment opportunity for Forex traders. Cryptocurrency is still very new, the first decentralized cryptocurrency, Bitcoin, was created in 2009 and at first, not many people thought it would be such a huge success.

Bitcoin, like other cryptocurrencies, offer people the ability to make payments without much exposure, no government body has access to the payments made in crypto, which creates a very safe and secure environment for many people. In 2017, Bitcoin was at its all-time high and even more, people got interested in it.

Because of such benefits, many people started using crypto for Forex trading and the number of these investors is rising every day. However, every trader must keep in mind that trading crypto is very risky, but on the other hand, FX trading is risky as well. The main thing that every investor should make sure is that they are trading with the most trustworthy and safest Forex brokers on the market.

How does crypto trading work?

Generally, cryptocurrency trading involves speculating on price movements via a CFD trading account. During trading, you can also buy and sell the underlying coins with the help of an exchange. CFDs trading, to say it is the easiest way possible, is trading with derivatives. This enables traders to speculate on crypto price movements without actually taking ownership of the coins themselves. If traders believe that the currency will rise, the will buy the CFDs, and if they think it will fall, they will sell it.

Traders also buy crypto with the help of exchange, which means that they are purchasing coins themselves. For this, they will have to create an exchange account, and store crypto tokens in their own wallets until they are ready to sell. Traders who use this method need to be very knowledgable in the world of Forex and crypto, also, they will have some limits on how much they can deposit, while accounts can be very expensive to maintain.

What investors should know about trading with crypto

Generally, Forex trading is already a very risky thing to do, so traders must be sure that they know what they are doing. Crypto trading is also very risky because the prices of crypto are ever-changing and it is very hard to tell how will it change.

However, as risky as it is, it can also be very rewarding. One thing that traders must think about a lot before they start trading is to make sure that they are trading with the safest Forex brokers on the market. But because crypto trading is not that well regulated, it is a bit hard to find out which broker to trust. However, as we have already said, many countries have started working on new regulatory guidelines that can be very helpful for the future of Forex trading.

If you want to start trading with crypto, you must make sure that you understand everything about not only Forex trading, but cryptocurrencies as well. Thanks to the benefits that crypto has, many Forex traders are moving to crypto trading, and as studies show, the number of crypto Forex traders is growing every day.

Born in Bucharest, Marius is the founder of Crypto Adventure. Since his first contact with Bitcoin and cryptocurrencies, he never stopped believing that they are one of the most important innovations of our time, which will forever change the way business is done.