Digital Exchange Or Forex Broker: Where Is Better To Trade Cryptocurrency
The rapid growth in the value of digital assets breathed life into crypto trading, which began to lose popularity. Each type of crypto trading has its advantages and disadvantages. However, there is a fundamental difference between them, which every trader needs to understand.
On the digital exchange, real cryptocurrency is used for popular currency pairs trading (คู่สกุลเงินที่นิยมเทรด, which is the term in Thai), which is located on its trader’s exchange account. That is, real digital coins are sold and bought.
Forex brokers use a CFD price difference contract, and a trader makes a profit by predicting the price of an asset. Naturally, we are not talking about any real turnover of cryptocurrencies that are traded.
Advantages Of Trading Cryptocurrency On A Digital Exchange
- The trader is the physical owner of the cryptocurrency. Even if its price falls, it remains on account of the owner.
- Digital trading platforms provide a large number of assets.
- When trading on cryptocurrency exchanges, arbitrage trading is allowed.
Disadvantages Of Digital Exchanges
- Liquidity of assets is limited, especially in times of a sharp drop in the value of cryptocurrencies.
- The trading interface for all exchanges is different and requires a study on each exchange.
- There is no possibility to limit risks with a stop-loss order.
Advantages Of Trading Cryptocurrency With Brokers
- The activities of a licensed broker are in the jurisdiction of a particular financial regulator. In case of any disputes, the trader may contact the regulator to solve the problem.
- Forex broker allows you to open sell positions in those assets that the trader does not have available, providing them, as if on credit.
- The broker verification procedure is somewhat simpler than on cryptocurrency exchanges, where the conditions are more stringent.
- The trader is not the physical owner of the cryptocurrency. If a stop loss is not set and the price goes against the trader, this can completely reset the deposit.
- Swap – A negative swap in the case of a long-term position can significantly reduce the amount of profit.
- The spread of cryptocurrencies at brokers is usually much wider than on cryptocurrency exchanges.
Evaluate all the advantages and disadvantages, then make the decision that is right for you, and let cryptocurrency trading, in any case, bring you profit.