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What You Should Know About Switching from Crypto to Forex

crypto trading
author Written by
Rex John Walsh
author Fact checked by
Sangram Mohanta

Last Updated on June 3, 2024 by TOP FOREX BROKERS REVIEW

If you decided to diversify your portfolio and switch to forex from crypto trading, there are some things you should now. Crypto trading is not that different from forex trading. However, the nuances that exist in forex markets are not the same as the ones you will find when trading crypto.

It seems like it might be hard to abandon the lucrative world of crypto trading so that you can be in the world of forex. However, the facts should show that the sustainability and endurance of the forex world, offer some options the world of crypto does not have.

If you are new and seriously considering getting into the world of forex, there is something else you should know. A broker is essential. For that reason, we think you should read our forex broker reviews to find the best forex broker in the world that will suit you.

Transitioning from crypto trading to forex will be challenging. However, we think you can do it. There is a way to make the method smoother and less painful. This guide will give you an outline of how you can move from crypto trading to forex.

The transition can be well-budgeted, less nerve-wracking, and take up less time.

Let’s get into it.

Here’s How You Switch from Crypto trading to Forex

The facts you are about to learn are very illuminating and essential. We know that it took you time and a lot of effort to understand crypto. For that reason, we are going to assume that you know a thing or two about the power of education when it comes to any financial markets.

The charts you have mastered, the crypto exchanges, and other fundamentals of trading assets, will apply here. You will have a easier time transitioning than someone who is starting from 'zero forex knowledge.'

Understand That The Forex Market Is a Two-Way Street

Crypto trading has an absolute straightforwardness to it. In the crypto markets, you usually buy the currencies at a low price and then sell them when the price goes up. That is a simple way to make money, and we know that crypto trading does not require much in the form of nuanced financial knowledge.

However, the forex market is not that linear. It is a two-way path in the sense that a trader has to start by opening a long or short position. You can learn more about how this happens by going through our forex education sections.

There, you will also be able to find forex broker reviews and, hopefully, the best forex broker in the world for you.

As we said, you will have to learn how to predict what could happen, using charts and the information they offer. You need to know what happens every moment to get profits from the currency pair you trade.

Depending on your position, you can make money from both the falling and rising of prices. It is not an easy thing for beginners to do.

For that reason, we have all manners of software that shorten the calculations and just show you what is happening in real-time. The crypto trading world does not need something so complex to operate well.

With these platforms, you will be able to see how the currency pairs traded works. Unlike crypto trading, you will have so many variables in the forex markets. But, you can look at everything that is happening on a graph and, with time, learn how to spot when to move in and when to exit.

The forex market is also a zero-sum kind of market where the money you lose, is gained by someone somewhere else.

Select At Least Three Currency Pairs for Trading

Unlike crypto trading, where you focus on just one currency like BTC (Bitcoin) or ETH (Ethereum), the forex traders rarely, if ever, trade only one asset. The minimum number of assets you need to trade as a forex trader is three.

As a beginner, you will want to stick with the traditional currency pairs. They are USD/JPY, BGP/USD, and EUR/USD. It is good to learn all you can about the significant pairs so that you can transition from trading just three currency pairs to more.

The three mentioned there are called the Golden Trio because they are the movers and shakers of the market. They are the dominant currencies that witness the most action.

We measure the power of a currency in the forex markets, based on how much volume it can move in a day or week or month. After you learn the less volatile currency pairs, then you can move on to the big three.

Where in crypto trading, you had to focus on one and didn't have to trade it against others while focusing on many other variables, here you have to look at more data.


Do Not Start Trading Without A Clear and Proven Strategy

There is a lot to learn. Listen up crypto traders: never go in without a strategy. So, where do you get one of those? Well, the strategies are developed by the traders over time.

As you will see in our blog about education, the strategies are developed when you use demo accounts. Crypto trading may not have demo accounts, but forex does. You will receive fake virtual funds, real market data, and a platform.

You will then proceed to apply all the things you have learned up to that point, to come up with a technique that works for you.

Strategy is how you avoid making mistakes that can cost you money. Strategy is repeatedly tweaked to make sure that it works and that there is consistency. Without a strategy that delivers consistent results, you will not be able to turn a profit quickly.

Start with Momentum Strategies

No doubt, crypto has changes in prices where a trend starts and then ends at some point. Well, in forex, we have the same thing. You will need to make sure that you learn about momentum and the strategies that you can apply there.

As you have no doubt done in the crypto trading world, this one will also need you to seek out a way to trade the currency pairs most compatible with your knowledge. Never guess.

  • So, what you need to pursue the aggressive uptrends like this:
  • First, you identify the momentum point.
  • Then you test and use the practical strategies that you develop to trade the momentum identified.
  • Practice risk minimization to make sure that you know when you will exit before you open the position.

As you will find out, unlike in the crypto trading world, we stress very much about the need to have a strategy and a way to minimize risk because losing money is easier than you think.

Never Risk Your Entire Deposit

Where in crypto trading, you would just wait for the value to go up so you can sell, forex requires more finessing than that. You never put all the money you have at stake when you start. The risk in forex is much higher than in crypto trading.

That is why we always begin by telling new students that they need to learn as much as they can, so they do not make mistakes like this. When you have gained enough experience, we still do not recommend putting everything at stake.

Usually, we recommend a 3% of your total deposit, for every trade, to begin with. Crypto trading risks are just not the same as what you will encounter here. For that reason, always practice caution.

Pro Tip- We stress on education a lot because we know for a fact that no one can make it in the forex world by themselves. Always learn before you try to get into the forex markets.

A Comparison of Crypto trading and Forex Trading

Before you transition, you need to know that the two financial markets are different. To understand how various, we are going to break them down into five major defining features. At the end of this illuminating comparison, you will see just how crypto trading differs from forex.

  • Stability

Crypto trading has a reputation for being unexpected and prone to experiencing huge uptrends and downtrends. The stats from BTC from the past few years attest to the volatility of crypto trading markets.

Forex is volatile as well but much stable with consistent uptrends and downtrends. There might be the occasional crash, such as witnessed in the middle of a pandemic like the outbreak of the COVID-19 virus. However, in regular times, the stability is noticeable.

  • Liquidity

The crypto trading market is less liquid. The volume traded is around 53+ billion USD. Most of it is BTC, with a whopping 67%.

The crypto trading market pales in comparison when put up against the astonishing volume of 5 trillion, traded by the forex market. The most significant share goes to EUR, USD, GBP, JPY, CHF, AUD, and CAD, in that order.

  • Hours of Trade

The crypto trading markets never go to sleep. They are always open 24 hours a day, seven days a week.

The international forex markets are open for trading 24 hours a day for five days a week. They also have major trading sessions in New York, London, Sydney, and Tokyo.

  • Middlemen Fee

There is no need for intermediaries in the crypto trading world because everything is peer-to-peer. However, to reduce the risk, traders use the crypto trading exchanges like Binance. To use such services, there is a fee to pay.

In the forex markets, you cannot skip the middleman. To find the best broker in the world, read our forex broker reviews. There is no peer-to-peer trade like in crypto trading. Here, you will pay a small fee for services, partnerships, or consultation and support to operate.

  • Regulation

Because of the decentralization, it is hard to regulate crypto trading. They have serious issues because of how new the technology is and the fact that there is no clear legislation for it yet.

The forex market is more secure because of just how regulated everything is. Just like in crypto trading, some choose not to get regulated. It is expedient to stay away from them if they cannot prove regulation. The reason is that, if there is a problem, you will not get any help because there is no governing body you can report to.

Why Forex Has More Education That Crypto trading

When you get started, you will need to know that you have to be well educated in what the market is all about. That is why we have an education program that will show you how to get started and take you from the beginning, all the way to the end.

The topics are divided into definitions, mathematics, strategy, all you need to know about platforms and other essentials.

You will find out that most of the traders who flame out, are the ones who do not bother to learn anything useful before they get started.

You may see a lot of advertisements that tell you how easy it is to make it in the world of forex if you knew just one secret. They are not valid. This is not like crypto trading. What you know is directly related to how much money you can make.

You did not have brokers in the world of crypto trading, but you cannot do without them here. You will need to read our forex broker reviews to find the best forex broker in the world.

In Conclusion

Is transitioning from crypto trading to forex easy? Not at all. Can it be smooth? Absolutely. You just need to know how to do it, and we'd like to think that at this point, you have some idea of what you will need to do to get there smoothly.

As we mentioned several times, in terms of brokers, you will need to get some of the best forex broker in the world. For that, you will need to read our forex broker reviews where we make comparisons too. The information there will point you in the right direction.

There is a lot to learn before you can honestly say that you now understand what the forex has to offer. The work that goes into understanding crypto trading is pretty much the same amount of work you will need to put into this.

Diversification is great. We support any effort made to invest in more than one place, just to make sure that if you break eggs in crypto, you have something to hold you up somewhere else.

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