As you may well know, cryptocurrency has become increasingly popular among Africans. Analysts have attributed this development to the continent’s tech-savvy, younger population who have embraced financial technology; specifically digital payment. In the same vein, Forex trading has also seen increased growth, with an estimated 1.3 million traders recorded in Africa.
In view of this level of growth, it is not surprising that many potential traders want to start trading. But most of them are uncertain about which currency to choose. To help such people decide, Danny Mawas, a Regional Director at INFINOX, said it’s important to start by doing one’s careful analysis first. Conducting a careful analysis will also help you to understand the differences that abound.
“Identify your personal goals, resources and risk tolerance before choosing your risk and trade management strategies. It’s also crucial to spend time researching and analysing both markets before trading.
“Crypto currency trading is trading digital or virtual currencies that are secured by cryptography, the most famous example being Bitcoin. Trading takes place on relatively new decentralised platforms using blockchain technology, a system which makes it almost impossible to change, hack or cheat. Forex is foreign exchange, or FX, and takes place in the largest, most liquid, well established global markets. Volumes of up to $6.6 trillion are traded daily using 150 government-backed national currencies,” Mawas explained.
He further pointed out that it’s important to take note of the liquidity of the Forex market versus the crypto market. For instance, the daily buying and selling of Forex helps to create a liquid market that offers opportunities for all types of traders. More so, “Forex instruments also provide leverage as well as plenty of trade opportunities thanks to its volatility, thus making it an easy instrument to trade.”
Still on the differences between Forex and Cryptocurrency, Mawas said the Forex market makes room for private individuals, large institutions, governments, retail traders and more to participate. Also, trading Forex is less risky, more protected, better regulated and stable. Forex gives investors the opportunity to react to market movements as it is influenced by political or economic factors which prompt investors to enter or exit the market accordingly. However, the same cannot be said for Cryptocurrency as Mawas explained.
“Trading crypto can be more risky as there is less information and fewer case studies to predict performance. There are less established markets and although there may be a promise of larger returns there is no profit guarantee, but a long-term option for potential profit,” he said.
For those that wish to start trading Forex, there are some tried and tested strategies to consider. As Mawas explained, “a viable way to learn and kickstart your trading journey is via online community apps, such as IX Social, where traders can share knowledge, trades and experiences with like-minded traders. Users are put in the driving seat with the latest news, community trending topics, top trades of the day and the latest prices all in one place. Its easy-to-use functionality, coupled with an auto-copy feature that allows traders to automatically copy the top traders to receive the same results, makes it the ideal platform for beginner traders to learn and grow.”
Now, whichever currency you decide to trade in, it is advisable to not let your emotions take over. This is because “trading based on an emotional impulse often results in traders buying and selling at inopportune times. While trading offers great benefits, it is vital for traders to follow a strategy and to start simple. This will ensure their longevity, and prosperity, in the game.”
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