What Is the Difference Between Stock and Cryptocurrency Trading: 5 Facts


Stock trading exists already for several decades and its processes and principles are well-known and understandable. At the same time, the cryptocurrency exchange is something new and only a few people have any experience in it. In that way, many are afraid to get involved in it. Let’s analyze the main differences between them.

 

Software

Working on a cryptocurrency exchange involves the use of a standard set for analyzing the price chart. This contributes to some inconvenience in the trading process. For example, if in the programs offered by the stock market companies, the management of transactions is carried out literally in a couple of clicks, then on the digital asset exchange, a special calculator or tables in Excel format is used to carry out a similar calculation. However, the complete information provided by such exchanges fully covers this shortcoming.

 

Regulation

Companies registered in the United States or the European Union offer their clients deposit insurance in the event of unforeseen bankruptcy or any other unexpected situations. Accordingly, the safety of funds, in this case, is the prerogative of the state, not the company. As for cryptocurrency exchanges, they cannot offer such a service to their clients, at least not today.

 

Volatility

Volatility is one of the main advantages of cryptocurrency. Every day, it shows its growth, which has never happened in the stock market. Even when the UK announced its withdrawal from the European Union in 2016, the GBP/USD currency pair fell by more than 12{4de7e58d714acb382f797171837c220eeecc25e360d5f3cb91e8aad5df5e3a3b} in just one day, which cannot be compared with the digital money. It is capable of falling at once by 90{4de7e58d714acb382f797171837c220eeecc25e360d5f3cb91e8aad5df5e3a3b}. And all this is due to the same regulation. As long as there is no regulation on the exchange, liquidity will accordingly be at a low level, which will contribute to sharp jumps.

 

Trading bots

Writing a trading robot without trading through centralized exchanges is another benefit of digital assets. This provides a kind of protection for users when access to their funds is not available to third parties.

A trading bot greatly simplifies the trading process, since the user does not need to sit for hours at the monitor. At the same time, there are not many truly profitable robots, and they, as a rule, are not distributed. And this is no coincidence. Massive use will lead to the fact that the whole strategy of such a bot will simply come to naught, and it will no longer bring good profit.

 

In essence

If we compare a cryptocurrency exchange with the stock market or Forex, then the first has an undeniable advantage — access to data, high volatility, and easy access to trading. However, as a result of the lack of a regulatory system at such sites, making a deposit is accompanied by certain risks associated with its complete loss. At the same time, no insurance is provided on such exchanges.