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%
Exness information and reviews
Exness
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

How to Trade Stocks Online: A 5-step Process to Get You Started

Online stock trading can be confusing to the uninitiated, but newcomers looking to start their investment journey needn’t be put off. Here’s a 5-step guide to get you started...

Mastering Oil Trading: Comprehensive Strategies and Crucial Aspects

The world of oil trading offers a plethora of opportunities for savvy traders, but it also presents unique challenges. Understanding the nuances of trading in Brent Crude and West Texas Intermediate (WTI)...

Automating Your Forex Trading

As the forex market moves enthusiastically into the electronic age...

Five Bitcoin Day Trading Setups to Help You Make Money

Bitcoin trading has become big business in recent years as people have realised that the new and emerging market place is one that has the potential...

How to trade cryptocurrencies

Cryptocurrency trading has become highly popular over the past year. The crypto market has grown tremendously, with global market capitalisation reaching a trillion-dollar valuation.

What Is the Fear and Greed index?

If you trade crypto long enough, you will eventually come across the term “Crypto Fear and Greed Index.” This article will look at this useful tool, how to use it, and what it can mean for your cryptocurrency investments...

Navigating the Exciting Challenge of Trading Over 150 Stocks with ModMount

ModMount presents traders with the exhilarating opportunity to dive into one of the largest and most dynamic online markets – the stock market. This platform challenges traders, whether novice or seasoned...

Can you make money with crypto arbitrage?

Crypto arbitrage is the practice of and methodology behind taking advantage of price fluctuations in the price of various cryptocurrencies, such as Bitcoin or Ethereum. These variances...

What Are The Bulls Power And Bears Power Indicators?

To make forex trading as productive as possible and to make trades more accurate, it is recommended to use technical tools, such as indicators. The choice of indicators directly depends...

What is Leverage Trading in Crypto?

Leverage trading, also known as margin trading, allows you to significantly magnify your profits in the markets. However, bear in mind that leverage...

The Dynamics of Commodity Trading: An In-depth Look

From the very clothes on your back to the coffee you sipped this morning, commodities influence our daily lives. This vast market encompasses a wide variety of goods...

What Is Shiba Inu Coin?

Shiba Inu coin is a “meme coin” that caught the attention of crypto enthusiasts over the last few years. The coin is one of the largest of the "dog coins" and a direct competitor to Dogecoin...

Analyzing Cryptocurrencies: Key Notions

Today few professionals can boast of an impeccable trading process with cryptocurrencies - there are many nuances. In our article...

What Factors Affect the Price of Cryptocurrencies?

Do you want to trade cryptocurrencies but need to know when it is better to sell or buy them? What happens to the prices in the crypto market, and what should you consider?

APR vs. APY in Crypto: A Comprehensive Guide

Cryptocurrency investments have become increasingly popular in recent years, attracting investors from all walks of life. As the crypto market continues to grow and evolve...

Trading opportunities during the football world championship

The world football championship is fast approaching. Fans around the world are already thinking about how to best spend their time during this event, and soon...

Stocks CFDs That Could Get a Boost on Black Friday

As the busiest shopping season of the year approaches, consumers are getting ready to open their wallets and swipe their cards away. However, this season is not only...

DeFi Vs CeFi: The Battle For The Future Of Finance

The term DeFi is quickly gaining popularity, but not everyone understands what the emerging technology is, how it works, or how it compares to centralized finance, aka CeFi...

Trading in a Kimono or What Nikkei 225 Is

CFD trading in the stock market offers excellent opportunities for making money online. Moreover, unlike investors, a trader can make a profit not...

Bonds in 2023: Deep Dive into 7 Essential Bond Types for Investors

In the world of investment, bonds stand as one of the cornerstones, allowing entities, whether corporate or governmental, to secure funds over an agreed duration...

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%
Just2Trade information and reviews
Just2Trade
76%
FXNovus information and reviews
FXNovus
75%

© 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.