Why Choose To Trade Crypto Versus Other Options?
Admin
Jul 30, 2021
How Crypto Trading Measures Up
Everyone's talking about investing in digital assets such as cryptocurrency, but how does it compare to traditional options? As it's so new and fresh, now is the perfect time to explore the world of Bitcoin/crypto, and how it compares to more traditional investment options.
There are various investment types that can help you achieve your financial aims. Each investment type — from bank products to stocks and bonds — has its own set of features, risks and ways smart investors can use them.
Stock Trading
A ‘stock’ or ‘share’ is simply a way to build wealth. Buying a share means purchasing an ownership share in the company that issued the stock. Stock trading means:
- You have the right to a vote at shareholders' meetings (if you wish to use it).
- You may earn a return on your investments if the price appreciates or if the stock pays dividends. Note, however, that not all companies issue these.
Stock and share trading empowers ordinary people to invest in some of the world's most successful companies. For businesses, shares allow them to raise money to pay for growth and products.
Over the long term, the average yearly stock market return is between 8 -10%, when adjusting for inflation. There remains, however, the chance that the market could do something unexpected, and the outcome of your investment is therefore uncertain.
Commodity Trading
Commodities are natural materials or goods gathered and processed for industrial or commercial use. These include sugar, soybeans, oil, and gold.
Commodities are the oldest form of commerce. Commodity trading forms the foundation of our economy. Such raw materials are essential for producing energy, food, transport and clothing. These products are frequently mass-produced for quality and quantity, with the result that they command the same price regardless of where they were produced.
Commodities are bought and sold (traded) on exchanges in the same way as stocks. Well-known exchanges include the London Metal Exchange (LME), the Chicago Mercantile Exchange (CME), and the New York Mercantile Exchange (NYMEX).
Forex Trading
Forex (FX) trading is the act of purchasing one currency at the same time as selling another. Forex trading is considered high risk as you might estimate prices incorrectly, and the trade could work against you. That's the most obvious risk when trading the FX markets.
The combination of these two currencies is known as a currency pair. Currencies are always traded in pairs, and a unique three-letter code represents each currency in a pair.
Cryptocurrency Trading
A decade ago, holding part of an investment portfolio in cryptocurrency would have been regarded as an outlandish idea. Now, however, people are more likely to think you are in danger of missing out if you don't hold digital assets, or if you haven't yet traded in Bitcoin, Litecoin or Ethereum. Diversifying your trading portfolio is important.
Cryptocurrency Investments
These days, cryptocurrencies are everywhere and are no longer the province of tech nerds or day traders. Many traditional organisations are integrating some form of cryptocurrency into their platforms.
Investing in Cryptocurrency
Investing in crypto assets is still regarded by some as risky as it is more vulnerable to large price swings or even hacks, but is also potentially highly profitable. The early adoption opportunity of crypto and its volatility means that it provides promising opportunities.
Conclusion
Crypto trading is a sound option if you want to gain direct exposure to the current demand for digital currency. A less hazardous, but potentially less lucrative alternative, is to buy the shares of companies with exposure to cryptocurrencies.
Many cryptocurrencies like Bitcoin and Dogecoin are launched with ambitious objectives, which may be achieved over long-term horizons. While the success of any crypto project is not guaranteed, if a project achieves its goals, early investors could reap rich rewards over time.
Start your cryptocurrency journey with MEX Digital. Remember, proper diligence and sound judgement should be used in evaluating the risks associated with these activities.
Trading cryptocurrency carries significant risk and losses can exceed deposits. Refer to our Terms and Conditions and disclosure material.
