There are some interesting comparisons of the two types of trading, one of which is being made in the “Bitcoin Forex Trading – How it Works.” The “Gold and Silver Forex Review” by Jonathan Clements, a currency trader who has operated several online currency trading accounts, also focuses on this comparison. He notes that the similarities between the two trading models are strong.
Let’s start with the similarities. Both digital currencies and commodities are assets, either physical or virtual. They have units called “bits,” which represent one unit of that asset, either money or a commodity. We will refer to this description as “bits” in our discussion.
One similarity between the two is the value of the currency. Whereas money has a fixed price, the price of a commodity does not change, which is why the price is known as a standard. Money can be measured in units of ounces, grams, dollars, euros, etc. We will use “bits” here to refer to the equivalent price in bits, either dollars or ounces. This is called “Bitcoins,” the only unit of “money” that can be easily exchanged.
Another similarity is the ability to trade against the price in the market. In the currency trading systems, we can place a bid or ask for one unit of currency or other asset and the price will fluctuate based on the demand and supply of the asset. If we do not have the right order in the market, we cannot have the right price.
The difference between the two markets is that in the stock and currency markets, the market itself is measured in units. Because of this, there is only one market where buyers and sellers trade. In the “bit” market, there are many different markets where each person can have their own markets, and so the quantity of transactions can be wildly variable.
Price discovery is another similarity between the two markets. The market can fail to discover a fair price in a commodity because of economic forces and this has been the downfall of traditional commodity markets.
One comparison in the “Bitcoin Forex Trading – How it Works?” report is that trading in the “Bitcoins” involves a lot of “swing” trading, where an investor can take money out of a currency based on short-term price movements, and then start again. This is not the case in the stock and commodity markets, because prices are known over time.
In the “Gold and Silver Forex Review,” by Jonathan Clements, he notes that the price in the commodity markets is highly volatile. In a currency trading system, the market itself can lead to these changes, and there is no choice to consider here. In a commodity market, changes in supply and demand affect the price, but are not accompanied by this “frictional behavior.”
Clements uses the example of the metal as an example of an asset that can be used to trade in the commodity markets. We will refer to this as “silver” in this comparison. And in the “Bitcoin Forex Trading – How it Works?”
If a person owns silver coins and they want to sell them, they can do so, whether the price is up or down. If the market itself is up, they can have the coins sold for a profit. If the market itself is down, they have no choice but to hold on to the coins and hope that the price will rise.
In a gold trading system, one has to be aware of the up and down trends. In the commodity markets, the price can be subject to drastic changes, but if you know where to look, you can have a trading strategy that is stable, using the price trend. in the market to find the right price to buy and sell at.
It is helpful to know the similarities between the two Forex markets when trading in either one of them. That way, you will avoid possible pitfalls in the short term that may take you out of your trading system.