What’s The Difference Between Automated Forex & Crypto Trading?

12 min read

Automated trading offers individuals the ability to invest in numerous different markets without having to spend hours researching and analyzing the price movements. Trading robots and EAs are very frequently used in numerous financial markets, including Forex and Crypto trading.

While there are many similarities between crypto and Forex automated trading, there still are many distinct differences that make these two totally different from one another. Understanding the main difference between Forex and crypto robots can be quite important for investors.

In most cases, Forex automated trading includes using Expert Advisors, which are pieces of software mostly used on trading platforms such as MetaTrader 4 and MetaTrader 5. Forex EAs are very easily customizable and there are numerous of them available in the market.

In fact, these trading platforms offer traders the ability to customize the EAs according to their personal needs. You can even create one of your own if you are knowledgeable enough in programming.

On the other hand, there are crypto trading robots that work in different ways. In most cases, these robots are offered by special software companies and are using different types of algorithms to analyze the market data.

One difference between Forex and crypto bots is that most of the crypto robots are using API keys to connect with exchanges, while Forex EAs are installed directly on the trading platform. But, this is not all. There are several other differences between these two that traders should know about. Let’s discuss them and see how crypto trading bots and Forex robots are different from one another.

Main Reasons of Forex & Crypto Autotrading Difference

While there might be some similarities between using crypto and Forex trading robots, there are some things that make these two distinctly different from one another.

The main reasons why using trading robots for each of these markets differ is that first of all, they are different assets and work in a different way, they have different volumes, their volatility is drastically different, and so on.

So, let’s discuss the main things that make Forex vs crypto trading automation so much different and what should traders know about them.

Different Types of Assets

The first and most obvious difference between Forex and crypto trading robots is that they are different types of assets. Forex and cryptocurrencies are fundamentally different. While both of them might seem like currencies, they are still very different from one another.

This is especially true when it comes to the trading process. When you are trading fiat currencies (Forex trading market) you are using trading platforms such as MetaTrader 4, MetaTrader 5, or others, to open and close positions in the trading platform.

On the other hand, the trading process of cryptocurrencies is fundamentally different. When trading crypto, you are not dealing with Forex brokers, rather, you are using crypto exchanges. Crypto trading means that you are buying and selling cryptocurrencies in order to make a profit instead of exchanging one currency for another.

Another huge difference between these two markers is liquidity, which makes trading them a totally different experience. In addition to these, cryptocurrencies can also be traded using CFDs. CFDs are types of assets that let traders earn profits in the markets without having to deal with the underlying assets at all.

So, at the end of the day, cryptocurrency and Forex trading are fundamentally different markets. Because of this, it should not come as a surprise that automated Forex trading compared to crypto is a totally different experience.

Because these two assets are so much different from one another, it might be somewhat difficult for those who are used to one of the markets to start trading another one. That said, it is very much possible to gain enough skills for trading both of these assets by using trading robots.

Different Kinds of Volume

While discussing the differences between Forex and crypto automated trading, it is very important to talk about volume. This is one of the main differences between these two assets at it should not be ignored.

In the majority of the cases, those who are trading Forex are more likely to get a much better deal when it comes to leveraged positions than it is for those who are trading cryptocurrencies. It is very common for the Forex trading market to offer clients as much as 1:1000 leverage, or maybe even more.

On the other hand, in most cases, crypto traders are offered lower leverage. It might be 1:3, or even 1:2. This mostly happens because of the volume differences between the cryptocurrencies and Forex currency pairs.

However, it should also be noted that the available leverage for traders largely depends on one’s location. While some of the jurisdictions allow trading with high leverage, others have many restrictions in this regard. The main reason for this is that leverage can also increase the risks associated with trading in addition to increasing the possible profits made trading Forex.

Still, the volume stands to be one of the biggest differences between Forex and crypto automation. While you can set your Forex trading robot to use higher leverage, the same can’t be done with crypto robots.

Because of the leverage difference between Forex and crypto trading, many believe that crypto investors are at a larger risk of losing their own money. While traders can only risk $100 and still make a lot of money, crypto traders can’t do the same. But, leverage can also act as a double-edged sword and make Forex trading a lot riskier as well. So, before using it, traders should think if it is worth taking the risk.

Complexity Differences

Another huge difference when discussing automation in crypto and Forex is the complexity of these two markets. When it comes to robots analyzing the market, it is much easier for them to do it in the crypto trading market. This happens because in most cases, there are not so many factors influencing the price movements in crypto trading, which makes it much easier for robots to analyze.

On the other hand, you have the Forex trading market, where there is too much information that traders need to consider. This can be anything from publications of the central banks around the world, the steps taken by different countries, the general socio-economic situation, and so on.

Because there are so many factors that should be remembered, it might be a bit hard for Forex robots to analyze the market. As a result, in most cases, Forex robots are required to be stronger and able to analyze a lot more information in a shorter time.

While crypto price fluctuations can also be influenced by numerous factors and events, the Forex trading market still tends to be a lot more complex in terms of price movements. In addition to regular algorithmic trading and following general market trends, Forex traders are also required to be very actively involved in the general, fundamental part of the trading.

Because of this, it should not be a surprise that crypto vs Forex trading automation is fundamentally different from one another. In most cases, developers of crypto robots have to keep in mind the complexity of the market.

Forex is the biggest financial market around the world and it sees millions of positions opened and closed every day. Forex trading is so much more complex than crypto trading that the robots end up being fundamentally different as well.

Ownership Differences

While we have already discussed the major differences between trading robots in these two markets, there still are many that should be noted. One that makes these two markets very different from one another is ownership.

Now, in terms of fiat currencies, everything tends to be quite straightforward in terms of ownership. On the other hand, you have the crypto market, where everything is fundamentally different.

Whenever you are buying cryptocurrencies, one of the worries that you might have is to find a secure space to store them. While the majority of modern crypto exchanges give you the ability to store your cryptos on the platform, many traders are still finding it hard to decide what to do with their cryptocurrencies.

When talking about automated Forex vs Automated crypto trading pros and cons, these ownership concerns should absolutely be discussed. But, it is not al. As we have already noted above, cryptocurrencies can also be traded using CFDs, where you are not owning anything at all, you are simply speculating on the price movements in the market.

In fact, some of the auto traders available in the market only work for crypto CFD trading because of the concerns associated with storing cryptos. Ownership acts as a huge difference between these two markets and it should be kept in mind when you are thinking about why you can’t use your crypto trading robot when trading currency pairs.

The fact of the matter is that these two markets are fundamentally different and the robot that was programmed to take care of all the challenges and problems that might come with trading cryptos, will not be able to be effective in the currency pair trading market.

Strategy & Volatility Differences

Another factor that should be always considered for crypto automated trading compared to Forex is the volatility of these two markets. While Forex prices change every second on a small scale, the cryptocurrency market sees massive changes in a very short time.

In most cases, the price of currency pairs changes below 1% a day, while the price of the cryptocurrency can change on a drastically different scale. For example, it might see a 50 percent drop in just a few hours or an 80% increase in a day.

Because of this, the cryptocurrency market requires totally different attention from traders. Because the prices can change drastically in such a shorter time, traders are also more likely to use different trading strategies from Forex trading.

Because of this, the same strategy can’t be applied to both of these trading markets, which is another reason why the robots used in these two markets are different from one another.

As these two assets require different strategies, using a robot that was designed to work well in conditions that are more likely to happen in one of these markets, will not be able to be effective in another.

As a result of these differences, Forex robots compared to crypto robots need totally different settings. Another thing is that in the Forex trading market, there are numerous currency pairs available. When traders are using robots to trade currency pairs, they have to customize the settings of the robot according to the currency pair they are trading.

As for the crypto trading robots, they simply are not as easily customizable, which makes them very different from the Forex EAs.

So Which is Better for Autotrading? Forex or Crypto?

We have already talked about the main differences between the Forex trading robots and the crypto bots. Both of them are used by millions of traders every single day around the world. Over the last few years, many companies around the world have created trading robots that offer traders different types of trading services.

While the differences of crypto vs Forex trading automation can be easily identified and perceived, saying that using trading robots in one market is better than in the other is simply impossible.

At the end of the day, when it comes to deciding to use Robo trading in crypto vs Forex, it is very important to understand that it depends on several factors. First of all, something that you should keep in mind is the trading strategy that you are using.

If you are a long-term crypto investor, it is very hard to see the reason behind using crypto robots. On the other hand, if you are someone who is trying to make profits from the smallest price movements in the market, using trading robots makes a lot of sense as they can help you make decisions in a quicker manner.

So, all in all, using trading robots is a decision that every trader should make on their own, according to their personal needs.

FAQ on Forex and Crypto Automated Trading Differences

Is automated forex trading more profitable than crypto?

While Forex is believed to be more stable than cryptocurrencies, crypto sare considered to be able to provide quicker and higher profits to investors. This means that bitcoin, as well as other cryptocurrencies, should be able to generate higher profits for traders. However, they can also generate higher losses than Forex trading. So, before making decisions about which assets to trade, try to look at the picture from all angles.

Is automated trading reliable at all?

Of course, automated trading can be reliable. In fact, automated trading is considered to be a very sophisticated method of trading. While there is some type of risk associated with using robots for trading, these bots can also be very helpful for traders for quicker and more efficient market analysis.

As for the crypto vs Forex automated trading, both of them are known for being able to provide great help to traders.

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