5 skills experienced traders can apply to Bitcoin and crypto markets in 2022

Posted: 17 January 2022 4:30 pm

Why your forex market skills might be more applicable to crypto trading than you think.

Sponsored by Capital.com. Regulated by ASIC (AFSL 513393). One-click trading with 4,000+ markets. Trade cryptocurrency CFDs on Bitcoin, Ethereum and altcoins without owning or having the burden to store them. Trading crypto CFDs also allows for leveraged trading.

CFDs and forex are risky investment products and most clients lose money trading. Consider whether this is right for you before making a decision.

Despite the differences between more traditional financial assets and the crypto markets, investors might be shocked to learn most of their skills are highly transferable.

This is due to investors taking the same basic approach for both products. Forex skills, especially, can be widely applicable.

Let's look at some of the similarities and differences to regular markets and explore 5 skills you as a trader may have which could serve you well for crypto trading...

Getting started in crypto

Unlike traditional markets which are usually government-backed, crypto projects are often decentralised.

Similarly, though, crypto markets can be bought and sold via exchanges, with the coins stored in digital wallets. Crypto contract-for-differences (CFDs) are another option to increase your exposure into the digital asset space without having to learn too much on the technical storage side of crypto. For example, Capital.com offers more than 200 crypto CFDs – including Bitcoin and Ethereum CFDs – and allows for leveraged shorts and longs.

Price movements for crypto assets can be influenced by:

  • Supply and demand
  • Cost of production
  • Competition, including from other cryptocurrencies
  • Regulation from governments
  • Media coverage
  • New economic developments

Sound familiar?

Experienced traders will recognise most of the drivers behind cryptocurrencies are also what move CFD and forex markets.

Not only does price movement largely reflect similarly, but basic fundamental analysis also holds true.

Investors who are looking to get ahead in either market should gain a strong understanding of the respective markets they are trading in.

Also with the current digital age, both traders can easily execute new trades.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

Here are 5 skills traders may have that can be applied to crypto:

1. Technical indicators and fundamental research

It goes without saying, but investors in the CFD and forex space have gained skills in technical and fundamental analysis.

These skills are transferable and can be applied to either traditional or crypto markets.

2. Crypto CFDs on brokers such as Capital.com let you gain exposure on a platform you're already familiar with, without having to sign up for multiple accounts with different providers to gain access to the products you want.

Crypto is becoming more and more mainstream and many brokers are now offering their customers access to crypto CFDs markets.

This is making it easier for experienced traders who are already familiar with how a traditional forex or CFD broker works.

3. Crypto is often traded in USD – like many FX currency pairs. In Australia, brokers like Capital.com and other exchanges also offer major pairs in AUD.

Even though Bitcoin and other crypto currencies are decentralised, they can still be traded as a currency pair just like any other forex trade.

In cryptocurrency, this can occur in two ways.

Investors can trade one crypto asset to another - for example Bitcoin Litecoin (BTC/LTC) - or they can trade for a currency, such as BTC/USD or BTC/AUD currency pairing.

This should be familiar to experienced investors who would've traded in similar forex products.

Depending on the platform, various crypto to crypto pairs (including BTC) may also be available.

4. All your leverage and risk management skills can be put to use to trade short and long, and at Capital.com leverage is not compulsory – you can still stay 1:1.

Again, despite the products themselves being different, the traditional trading metrics remain the same.

Investors who are familiar with leverage, risk management skills, and have performed short and long trades can use such skills to trade crypto assets.

In Australia,the current maximum leverage you can access is 2:1 for crypto CFDs however, at Capital.com, you have full control over the leverage and can stay at 1:1.

Keep in mind that this is a very volatile market. These types of tools should only be used by experienced traders with a strict understanding of risk. As a high-risk endeavor, be sure to understand the consequences and the possibility of losing your capital.

5. Trading, swing and scalping strategies you've previously used may also be applicable.

Experienced investors who have already seen market gains and pull backs in other asset classes may be more accustomed to trading incredibly volatile markets like cryptocurrency.

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Differences between forex and crypto trading

It would be remiss not to point out the difference between trading the products as well.

Crypto markets are relatively new compared with forex trading, and as such, some suggest that crypto markets can come with more risks and price swings compared with CFD or forex trading.

But volatility works both ways.

If an investor can catch a popular crypto asset on the way up, it can have a meaningful impact on their bottom line.

Crypto markets are also not regulated in many countries due to being a decentralised finance.

Forex traders would be used to extremely liquid markets and readily trading between the main currency pairs.

But in crypto, due to the large volume of coins and smaller trading volumes, it is less liquid.

Crypto markets are also still in their development stage with different regulations per country. As such, crypto investors have the additional hacking risk associated with them.

There are numerous examples of large hacking events. As an example, on 4 December 2021, hackers took US$196 million from crypto trading platform BitMart.

This is compared with the highly regulated CFD and forex markets.

Finally, market hours are very different. Most forex and CFD traders can enjoy their nights and weekends without trading.

But in crypto land, it's 24/7 – exposing investors to large market swings when traditional products are closed.

Trade Crypto CFDs with Capital.com

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