Crypto vs forex trading, what is different?
Market hours, volatility, units and where you trade. Four things to know before moving from forex to crypto, or the other way round.
- Crypto trades 24 hours a day, every day
- Crypto swings harder, so you need a smaller position size
- Crypto position size = money at risk divided by the distance to your Stop loss
Both markets use similar chart analysis, but there are four differences big enough that you need to adjust how you trade.
Market hours
Forex is open Monday to Friday, while crypto trades 24 hours a day, every day. Crypto prices can move while you sleep or over the weekend, so any order you leave open should always have a Stop loss.
Volatility
Crypto’s daily swings are several times larger than the major currency pairs. So place a wider Stop loss and open a smaller position, so the money you risk per trade stays the same.
Units
Forex uses lots and pips. Crypto uses number of coins and price. The position size formula is:
Number of coins = money at risk ÷ (entry price − Stop loss price)
For example, if you are willing to lose 20 USD, enter BTC at 62,000 and place your Stop loss at 60,500, you get 20 ÷ 1,500 ≈ 0.0133 BTC.
Where you trade
Forex is traded through a broker. Crypto is traded on an exchange. Choose one that is licensed by a financial regulator, and turn on two-factor authentication.
This is general education, not investment advice. Trading is risky and you may lose all of your capital.