HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

Best choice for trading cryptocurrencies


Exchanges, wallets or Forex: what’s the best choice for trading cryptocurrencies?

There are a least in 5 different ways you can invest in cryptocurrencies nowadays. They are: Bitcoin ATMs, Bitcoin futures, trading cryptocurrency on exchanges, Forex trading and storing coins in wallets. Each of these methods has its pros and cons. The exchanges are periodically hacked, use of wallets implies loss of money on commissions and time on transactions, while on Forex there is a limited choice of cryptocurrencies and there are swaps. In the article below we will discusse the advantages and disadvantages of each option to help you make the best investment decision.

Exchange, wallets or Forex: where is better to trade cryptocurrencies

In 2017, cryptocurrency became the most profitable asset. True, the risks of cryptocurrency were also the highest among traditional and non-traditional investment instruments. Although cryptocurrencies are intangible, they cannot be seen or touched, the rush demand for coins has led not only to the emergence of dozens of exchanges, hundreds of purses and exchangers, but also to the emergence of a separate direction in the production of video cards for mining, specially produced for the issue of crypto coins. Forex brokers, who added a new non-standard instrument to their assets, did not stand aside. And though many Forex-traders still prefer classical assets (currency pairs, metals, securities), cryptocurrency also gradually gain their attention, first of all, by their profitability.

Cryptocurrency trading options

Today, a trader can buy a cryptocurrency almost at every step, starting from exchanges and exchangers, ending with Bitcoin-ATMs. And let the terminals offer only Bitcoins, buying BTC and then depositing it to a card will take a maximum of 10 minutes without the risk of hacking and verification.

A trader has several options for trading cryptocurrency:

The advantages and disadvantages of each of these options, we will consider further.

1. Bitcoin Futures

With the launch of bitcoin futures, stock investors with high capital have the opportunity to invest in cryptocurrency without the risk of losing money on unregulated exchanges. Initially, it was even supposed that the bitcoin rate would decline due to the dominance of the “bearish” capital, but in fact the launch did not particularly affect the price of BTC. The weak points of this investment option are the high volume of start-up capital and the tax issue – the recognition of Bitcoin as an investment instrument officially imposes tax liabilities. The second challenge – you need to understand the principles of operation of CBOE, CME and futures, as well as the rules of the US stock market. For regular private traders or long-term investors the principles of wallets or cryptocurrency exchanges are more transparent and understandable.

2. Trading on cryptocurrency exchanges

According to the Coin Market Cap website, there are more than 1,300 cryptocurrencies in the world, and their number is growing every day. Each cryptocurrency is quoted on at least one exchange, of which there are dozens. Large exchanges have a wide range of cryptocurrencies listed, which can be bought after registering the wallet on the exchange. You can also mine cryptocurrency on exchanges. For example, Criptoria Exchange offers the exchange and mining of more than 220 coins. Exchange forums allow you to exchange views on potential cryptocurrency movements.

Another advantage of the exchanges –  the possibility to make money on the difference in coins’ prices at different exchanges. It all goes down to buying a cryptocurrency on the exchange, where the rate on it is the lowest, transferring coins to another exchange, where the rate is higher, and selling. Though the amount of such coins is decreasing, and the transaction commissions “eats up” the profit, the possibility of earning still remains.

Disadvantages of exchanges:

3. Storage of cryptocurrencies on wallets

Wallets differ from exchanges by a relatively greater security –  they are less likely to be hacked, although this also happens. True, for a smaller risk compared to the exchanges, the trader has to pay an additional commission and lose on transaction speed (with online wallets). Someone prefers to work exclusively with wallets, not trusting the exchanges, and someone uses the wallets for long-term storage. Wallets are more a trading tool than an investment option.

4. Cryptocurrency trading with Forex broker

It differs from all previous Forex trading options in that it is not a real asset, but CFD (contracts for the difference in prices). A trader does not receive a physical right to own a cryptocurrency, but only earns on his prediction as to where the price will go in the future. But the essence of earnings remains the same: earnings on the difference between the purchase and sale price of an asset.

In comparison with exchanges or wallets, cooperation with a broker looks more reliable for several reasons:

The advantages of trading cryptocurrencies on Forex:

Despite the obvious advantages in comparison with the exchanges, Forex has several disadvantages:

Conclusion

You can not say which investment option is better or worse. Each is optimal for a particular situation:

Forex will be interesting to those who earn on intraday strategies and save on swaps, preferring a moderate risk. If a trader has already established cooperation with a broker, then he does not need to open an account on the exchange.

You can combine all options to diversify risks. Your are welcome to share your opinion in the comments: which version of cryptocurrency trading seems best to you in terms of risk, cost and efficiency.

Author: Kate Solano, Forex-Ratings.com

RELATED

Forex vs Stocks: Differences, Similarities, and Which to Choose

The forex markets and the stock markets are two popular choices for investors and traders seeking to capitalise on market opportunities. While both markets offer potential for returns...

Advantages Of Using VPS for FX Trading

VPS is short for a virtual private server and it’s widely used for trading in the financial market. The VPS hosting service will be especially useful for traders who prefer...

Silver Trading Guide: How to Trade Silver and Why

Silver, often referred to as "the other precious metal," offers traders and investors a unique opportunity to engage in commodity trading. In this comprehensive guide, we will explore the world of silver trading...

Is MetaTrader 4 good for Crypto?

MetaTrader 4 is used to trade a variety of financial instruments including some of the world’s most popular cryptocurrencies. In this blog, we’ll look at the benefits of using MT4 for crypto trading...

Libertex: Tesla Stocks. Should You Buy and Trade?

Tesla is a well-known company. It's famous for its outstanding, high-tech products. When people hear Tesla, they think about something modern, going to the future...

What Is Cosmos Crypto?

Scalability and interoperability have been two significant problems for the blockchain world. There are a handful of options for interoperable blockchain networks...

IOTA: Will It Transform IoT and Rise?

From smartwatches and home appliances to self-driving cars, the ecosystem IoT (Internet of Things) has grown to cover all kinds of devices. That said, we expect...

What Made Bitcoin's Last Bull Market Different?

Bitcoin has experienced multiple bull markets, and this latest one, which began in 2018, is markedly different from the last. Between late 2018 and the time of this writing...

Investment Time Horizon: Definition And Its Role In Investing

Beginning investors who come to the stock market are inevitably confronted with terminology that is new to them. An accurate understanding of this vocabulary makes it possible...

Artificial Intelligence and Machine Learning in Trading

Over the past 60 years, AI and machine learning have made a breathtaking jump from science fiction to the real world. Though these technologies are still...

Structural unemployment

When it comes to interpreting the impact of employment data on the currency markets, conventional wisdom is pretty simple. Higher unemployment...

Investing in Bitcoin in 2020: Is It a Good Idea?

The one of a kind financial asset has been compared to gold and said to have the potential to unseat the dollar as the global reserve currency one day...

Pros and Cons of Forex Crypto Trading

Bitcoin and some other cryptocurrencies regularly provide the opportunity to multiply a forex trader's capital. With digital currencies the...

The Importance of Having a Forex Trading Plan

When approaching a field like forex trading where personal decisions translate into profits or losses, having a well-outlined and easy-to-follow plan can make the difference between success and failure...

What is a Crypto Saving Account? How to Earn Interest on Crypto?

One of the best ways to earn when it comes to financial markets is through this steady return of interest. While most bond and stock traders understand the ability to benefit from interest accounts...

Exchange Traded Funds (ETF) - Meaning, Types, Benefits

ETF funds may become a good alternative to stocks for those who have just turned their attention to earning on the stock market. We have decided to find out what ETFs are worth choosing...

How Is the Bitcoin Price Determined?

To be a profitable trader of Bitcoin (BTC), you need to understand what determines the Bitcoin price. The markets are much like many others, as they need to consider the supply and demand and adoption issues when it comes to BTC...

Trading forex, stocks, and crypto during a downturn

As 2023 gets into full swing, stock market volatility is heating up and showing a teaser of what’s coming—despite recession fears continuing to dominate headlines...

What do you need to know about options CFDs?

Unlike traditional options, which are contractual obligations giving the right to purchase or sell an asset at a future date, the options CFDs we offer are derivative...

What Is A Recession? Definition, Causes & Warning Signs

Economic development is cyclical - a boom is always followed by a downturn. Such a downturn is called a recession, a phenomenon that recurs with varying frequency and depth...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.