This article is for educational purposes only. Trading with leverage, margin, futures, or derivatives carries a high risk of rapid or total loss. This is not financial advice and should not be used to make trading decisions.
Forex vs Crypto vs Stocks: A Perspective on Risk
In this guide, I’ll break down how forex, crypto, and stocks differ, how each behaves in practice, and how those differences line up with your trading style and risk tolerance.
This is a question that many traders are asking themselves and without proper guidance, it’s difficult to know where to start. I’ll also walk through a comparison table that highlights the key factors traders usually weigh up when deciding where to focus.
Which one is more suited for you and which one is safer to trade?
These are the questions most traders care about, and I’ll share my view on which markets tend to be more workable from a risk and execution point of view. I will also give you a short description of the difference between forex vs crypto, crypto vs stocks, and stocks vs forex to further narrow down the facts.
Forex vs Crypto vs Stocks Overview
Read our comparison table of forex vs crypto vs stocks trading below to gain valuable insights.
| Forex | Crypto | Stocks | |
| Market Size | Very large | Medium | Large |
| Regulation | Mostly regulated | Mostly unregulated | Mostly regulated |
| Difficulty | Very difficult | Difficult | Difficult |
| Number of tradable assets | 10.000+ | 20.000+ | 50.000+ |
| Trading hours | 24 hours a day Mon – Fri | 24/7 | Mon – Fri 09.00-17.00 |
| Common market behavior | * Low volatility * Trending * News driven | * Extreme volatility * Pump and dump * Very emotional | * Medium volatility * Trending * Earnings driven |
| Long-term vs Short-term | More long-term | Both | More long-term |
| Technical analysis | Used by experienced traders | Not used on short time-frames by advanced traders | Used by experienced traders on longer time-frames |
| News dependant | Only on big news | Only on unexpected news | Yes, earnings releases are important |
| Accessibility | Easy (Global) | Easy (Global) | Medium (GEO dependant) |
| Demo trade | Easy to access | Easy to access | Easy to access |
| Risk factor | Medium / High | High | Medium / High |
| Negative balance protection | Not always | Always | Not always |
| Fees and Commissions | Low / medium cost | Expensive | Low / medium cost |
| Automated / Bot trading | Exist | Exist | Exist |
| Leverage ratios | 1:1 – 1:5000 | 1:1 – 1:1000 | 1:1 – 1:100 |
| Volatility | Medium | Extremely high | Medium |
| Liquidation risk | High | High | High |
| Bear markets | Does not exist | Yes, last between 3 – 24 months | Yes, last between 6 – 48 months |
| Bull markets | Does not exist | Yes, last between 1 – 8 years | Yes, last between 1 – 12 years |
| Liquidity | Extremely high | Very High | Very high |
What is the difference between these markets?
As you can see in the table above, there are some things that separate these three asset classes. What I find differentiates them the most is the trading hours, the regulation and safety of the trading platforms, the leverage ratios, and the difficulty to trade. In my experience, crypto markets often react more violently to sentiment shifts and liquidity surges than forex or stocks. The market structure is still immature, which can make some moves look obvious in hindsight, but that cuts both ways. Sharp rallies are often followed by equally sharp drawdowns.
The biggest differences between forex, crypto and stocks are:
- Trading hours
- Leverage ratios
- Trading difficulties
- Brokers with regulations
- Accessibility
- Volatility
If you’ve never compared how leveraged exposure works across markets, see our detailed guide on the mechanics of leverage for a deeper breakdown.
There are of course other factors that separate them but they do not impact how you trade them as a retail trader. For example, there is a huge difference in the size of these markets where the forex market is much much bigger than the crypto and stock market combined. However, this doesn’t matter in terms of how you set up your trading strategy since you will not have any problems at all entering the market with your size.
Another completely different thing is the number of tradable assets where there are plenty more stocks to choose from than forex leverage trading pairs and cryptocurrencies but this does not affect how you would approach each market since they are separated by their own markets and investors.
Other important factors that directly affect your trading are:
- Different fees
- Trading platforms
- Risk factors
- Market behavior
- Profit potential
When trading either forex, crypto, or stocks it is essential to find a broker that is reliable and trustworthy where you can deposit your margin capital without worrying about losing your stake. I would trust CFD brokers more than I trust some unregulated crypto exchanges for example and this is a game-changer for some traders. Leveraged products in crypto are tools that magnify both risk and reward. They are only appropriate for traders who already understand spot trading, margin mechanics, and liquidation risk.
The fee structure is also another factor that can have a huge impact on your results depending on if you are a short-term scalper or a medium-term swing trader. Some CFD brokers have very favorable spreads while other crypto exchanges are more expensive due to being a new technology. When choosing between these asset classes you should think extra about how you trade.
Which one has lower fees?
This is a factor that doesn’t concern investors who use leverage in long-term investing that much but it is a true make-it-or-break-it deal for scalpers and day traders. Here is my take on the cheapest market to trade:
- Forex
- Stocks
- Crypto
Now, the cheapest market to trade is by far the forex market, and here is why. The forex market has been around the longest and the amount of competition among forex is at an all-time high.
This means that for every new forex broker that enters the market, the spread and commission shrink a little bit to offer something better than what already exists.
Keep in mind that both stocks and forex can be traded on CFD brokers which means that stock trading comes in second place in terms of cost of trading and if you want variety plus low fees, a reputable CFD broker is often the most efficient way to access both forex and stock indices from one account.
So, what about cryptocurrencies? Are they that expensive to trade or is it just a honeymoon period for all the crypto exchanges that have entered the market first?
No, crypto is not very expensive to trade in reality, it’s just that forex and stocks are extremely cheap to trade. You will get by with a trade fee of less than 0.05% on some exchanges that are regulated by a government body.
Overall, crypto is the latest market to this mix and I think it’s not going to take long before crypto is the number one cheapest market to trade. Only time will tell but if things keep moving in the same direction then cryptocurrency trading will lead the way in a few years.
Forex vs Crypto
When you put forex and crypto side by side, the fit for different trader profiles becomes pretty clear once you know what you are looking for.
The biggest factor between these asset classes is that fx is much more long-term or swing trading oriented than digital assets.
Bitcoin for example, which is the larger cryptocurrency by market cap, has the potential to fall or rise more than 20% in a day. This is not going to happen in the EUR/USD currency pair.
If you are looking for stability in terms of a good broker that is trusted I would go with FX for sure.
There are still many bad actors in cryptocurrency trading and most of the platforms are still unregulated and offer leverage ratios of up to 100x leverage.
The commissions are also lower in fx and many active traders will have a lower cost by choosing that market.
If your priority is raw volatility and you are comfortable with larger swings and exchange risk, then the crypto market is where you will see the biggest percentage moves, both up and down.
How is forex different from crypto?
The biggest difference between forex and crypto is that the fx market is heavily regulated compared to the crypto space. This is because fx has been around for a very long time and cryptocurrencies just entered the marketplace as a tradable asset. FX generally offers a more regulated environment and smaller daily swings. If you are deliberately hunting bigger intraday moves and can live with higher risk, crypto will expose you to that, but it demands a different level of discipline. Below are three factors that separate these asset classes:
- Trading hours – Being a 24/7 tradable asset, cryptocurrencies are more attractive since day traders can pursue their careers even when the other markets are closed during weekends. This is a huge benefit for active traders.
- Arbitrage – Many people are seeking out digital assets for arbitrage gains which can sometimes be a real gold mine, even if you are a small trader. During volatile periods, the difference in prices can be between 5-15%.
- Stable movements – FX is a more stable marketplace in general and there are fewer surprises than in bitcoin trading for example. If you learn how to technically predict national currencies you are in for a good run.
Crypto vs Stocks
If you are choosing between these two asset classes you should know some things before you make your final decision. Some traders are much better off trading stocks than digital assets and of course the other way around.
If you are looking for a stable and tested product that works well in all time frames and is supported by well-established platforms then stocks might be a better option.
Keep in mind that pure stock exchanges don’t offer that much leverage and to be able to trade on high leverage you have to seek out a CFD broker.
The only difference is going to be that your local stock exchange might offer better deals in terms of loans and interest payments while an international CFD broker will probably offer better products and more stocks that offer leverage.
How is crypto different from stocks?
There are some big differences when comparing these markets and I wanted to discuss some of the most important factors that separate them.
While both a great for both short-term and long-term traders they have different behaviors due to one being traded 24/7 while the other is only traded during “office hours”.
This is of course something that can be analyzed and later predicted, but it’s something to keep in mind going forward.
- Earnings driven – Stocks are very dependent on earnings and without a healthy balance sheet or a good income statement, the stock might never take off or get that good momentum that you are looking for. Learn how to read these filings and you might see better results.
- GEO restricted – Cryptocurrency traders are not restricted to any geographical zone as much as stock traders. No matter where you live there is always a way to find that coin you are looking to trade. Stocks on the other hand might be impossible to trade since they are kept within the walls of a country.
- Economic situation – Bitcoin and other altcoins are not affected by interest rates, falling house prices, or the price of oil. Stocks on the other hand are very connected to how the economic situation of a country is doing. This can be both a good and a bad sign for you depending on your education as a trader and how good you are at doing fundamental analysis.
Stocks vs Forex
These two giants have been at war for a long time and it’s almost like watching two football teams battle it out for the most attention.
One is dominated by wall-street trading while the other receives more liquidity from different nations and super funds that move large amounts of money.
This creates different behaviors such as long trends in forex and market manipulation in popular names such as Tesla and Netflix.
The game between these two markets is tight and there are many benefits and drawbacks on both sides that make me think twice before choosing.
However, below are the two biggest factors:
- Leverage ratios – Some offshore FX brokers advertise extreme leverage, but that is usually a fast way to blow up an account. For most serious traders, the edge comes from reading the trend and managing risk, not from maxing out leverage.
- The big money – The big money in stocks is traded by wall-street firms and it can sometimes be difficult to tell what they are planning. In fx, the big money usually leaves trails and once you spot a trend it’s better to stick to it.
What other traders ask
Is crypto more profitable than forex?
Crypto can produce larger percentage moves than most FX pairs because the market is smaller, more speculative, and more driven by sentiment. That means strong trends when conditions line up, but also brutal reversals when liquidity dries up.
Can you build a career trading forex?
It is possible to trade FX professionally, but the bar is very high. You need a real edge, strict risk management, and a long runway of capital and time. Most retail traders do not get there, and many lose money along the way.
Is crypto bigger than forex?
No, the crypto market is not even 1% of the size of the forex market. National currencies, or the foreign exchange market is the largest in the world with over $5 trillion in volume traded each day.
Is Cryptocurrency similar to forex?
The biggest similarity between cryptocurrencies and forex is that they have longer trading hours, they are easy to access, and the leverage ratios offered are very high.
Is buying crypto the same as stocks?
Yes, in a way coins and stocks are both pieces of ownership in a company where the business sells part of its company in order to raise capital. However, the structure of how a cryptocurrency is set up is completely different from stocks. The behavior of these markets is also very different whereas cryptocurrencies are very traded on heavy emotion compared to stocks that are traded more based on earnings potential.
Final thoughts
In this tutorial, I’ve laid out how forex, crypto, and stocks behave so you can line that up with your own style, risk tolerance, and experience level. Some subtle differences don’t affect the way you trade the market and some larger differences completely change the game.
The most important factors when choosing between forex, crypto, and stocks are the way the brokers are set up, the trading hours, the volatility, and the market behavior in general. Below are some final points to help you pick your market.
- Forex – For trend traders who are patient with their entries and exits, forex might be the better choice. Most forex pairs show less volatility which is sometimes more comfortable for some investors and traders. The foreign exchange market is also more connected to the global economy than any of the other asset classes and if you are familiar with the macro economy and analysis of capital flow you will have a better chance of predicting the trends.
- Crypto – The crypto market is a very wild experience for everyone involved due to extreme volatility and very emotional upswing that can be traded on all time frames. Since most cryptocurrency exchanges are unregulated, the best brokers are only a selected few that have taken the steps toward crucial regulatory measures.
- Stocks – Stocks are very revenue driven and if you know how to read a balance sheet and income statement you have a large advantage. Most stocks trend very well when they are backed up by a good industry and great management. Technical analysis is very dominant in stocks where trend lines, support level, and resistance levels are very popular.
Focus on understanding unleveraged or low-leverage exposure first, whatever market you pick. Once you have a track record in spot and you understand how drawdowns, fees, and slippage affect your P&L, then you can decide whether adding derivatives or higher leverage even makes sense for you.
Anton Palovaara
This article is published under Leverage.Trading’s Risk-First Education Framework, an independent learning system built to help traders quantify and manage risk before trading.
