Forex & Bitcoin, probably two of the biggest trends on the internet, both so related and different at the same time, as they owe its existence to the world of economics but are meant to cover different needs. Throughout this article, we will keep you up to date with the basic concepts, functioning and relation between these two amazing worlds, for you to take more informed decisions whenever you chose to dive into the world of forex trading.
What is Forex?
Forex, is the abbreviation for Foreign Exchange, and nowadays is mainly used to make reference to the exchange trading market, used by many years, exclusively, by big investors and speculators, however, the foreign exchange market, has become one of the most exciting, fluctuant and popular markets in existence, due to the crescent internet penetration and a new wave of websites and platforms that allow users to get involved with the exchange of different currencies, in order to generate a profit out of this transactions.
How does Forex Works?
The forex exchange market is a decentralized marketplace where all the different currencies set its value and are traded. The need of exchanging currencies for different purposes have made of forex, the biggest and most liquid market in the world. Even though the foreign exchange market is one of the less fluctuant markets, traders have access to enormous and extremely risky leverages, this way, brokers have the opportunity of making more significant movements, nevertheless, you will have to consider that currencies value is subjected to supply and demand laws that can’t be easily manipulated due to the size of the market, so before taking any rush decision it will always be important to keep yourself informed on the new tendencies of the market, as well as taking some time to learn at least a little bit about technical analysis, indicators, strategies, models and other fundamentals of the foreign exchange world.
Another important thing to consider is, that the trading instruments will be less in comparison to the equities market, traders are usually limited to the use of just a few Currency pairs for their transactions, this way, they can keep a better track of their movements, imagine what it would be to follow thousands of stocks in order to reach a better transaction every time, this would be insane, the most commonly used currency pairs are: EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, NZD/USD, as well as other combinations of currencies and products.
What is Bitcoin?
Bitcoin, like the dollar or the euro, is a currency, most accurately speaking a cryptocurrency, actually, the most famous around, but what does this means? It means that, Bitcoin, unlike a regular currency, is digital money that sets its value as a result of a mathematical equation, that takes in account every transaction ever made with bitcoin, the offer and the demand on the market, among other factors. With a limited and predictable emission of coins and a very flexible, friendly, as well as secure platform, it gives his users a lot of freedom, the ability of doing international transactions and the possibility of avoiding mandatory fees or bureaucratic proceedings, characteristics that have made of bitcoin a very popular option among business and users all around the world.
Now that you know more about the Bitcoin and Forex worlds, you are probably able to notice the strong relation that both have, but still can’t see how one can be a tool for the other, mainly now that we have read that only a few combinations of currencies are mainly used for forex trading, well, the thing is simple, due to the popularity that Bitcoin has won on recent years, it has become one of the favorite payment methods for trading forex, this way, users have the opportunity to make a double play and invest the Bitcoins the owe, in order to generate a bigger revenue.
Finally, you should always take in consideration that, whenever you are investing money, you should do a vast revision of the different websites and platforms available around the web, the easiest way of doing this is by checking specialized websites and read their recommendations and reviews, also, the comments of regular users can represent a great feedback in order to make a good pick, but should take in mind technical factors like the availability of the payment methods we manage and how friendly the platform is.
We also would like to encourage you to keep up to date with as many financial information on trends and markets as possible, and remember who the biggest players are, since organisms and institutions like central banks, governments and financial institutions can be important factors that can affect our investments.
An informed investment will always have a better pay off, so keep learning and winning.