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Forex and Cryptocurrency Futures Trading

Forex and Cryptocurrency Futures Trading

Explainers Trading

25 Jul 2019

When it comes to trading, there are a lot of different types of markets for you to get involved in. Here’s a simple breakdown of forex and crypto futures trading to help get you on your way.


Forex is one of the most popular trading instruments with trillions of dollars worth of trades made every day. Whether you’re into day trading, swing trading, or in it for the long haul, the foreign exchange currency market accommodates different types of traders and strategies.

While price movements for trading pairs such as EUR/USD may not enjoy volatility to the same degree as, say, Bitcoin, because of the possibility to trade on margin - which is essentially leveraging your money in the forex market - forex trading can yield significant profits.

At the same time, trading on margin can also mean running a loss that cuts into your balance. For this reason, it’s crucial to place a stop-loss order.

In the absence of one centralized exchange, trading occurs via an electronic network of banks, brokers, and the world’s major financial centers. If you’re willing to trade across markets, it’s technically possible to engage in trade 24 hours a day, five and a half days a week.

Forex trading requires you to go through a licensed broker, such as your securities firm or a regulated forex broker.

Cryptocurrency Futures

Crypto futures trading is not the same as trading cryptocurrencies. With futures trading, you don’t actually own any crypto - although the underlying asset may be Bitcoin. Rather, based on your view on the market, you can either go long or short. Simply put, instead of trading into an asset, you invest in a price direction.

If you go long, and the price goes up, you make a profit. If you go short, and the price goes down, you likewise make a profit.

A major difference with forex markets is that cryptocurrencies are much more volatile. In fact, in a report (p.6) recently published by the International Monetary Fund, it is stated that the standard deviation of Bitcoin prices is approximately 10 times higher than in most G7 currency pairs - even slightly higher than in the Venezuelan Bolivar to US dollar exchange rate.

Similar to forex trading, it is possible to trade with leverage, but in contrast to forex, there are mechanisms in place that will prevent you from losing more than what you're willing to put in. This process is explained in more depth in our Beginner’s Futures Guide.

Another difference is that crypto trading, including futures, can be done directly on cryptocurrency and digital asset exchanges, 24 hours a day, seven days a week.

When you want to invest in crypto futures, it is important to choose an exchange that is trusted, transparent, embraces regulation, and that operates first-tier technology, built to drive true price discovery.

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