I’m looking at EURUSD vs BTCUSD for this question as an example. One moves a lot of points, but the points are less valuable (BTCUSD), the other does not move that many points, but each point is much more valuable (EURUSD).
I checked these three brokers’ demo account + MT5’s own demo account, and these are what I got:
The following are all at 1 LOT:
MetaQuotes Demo (EURUSD): Each point is $1
ForexTimeFXTM (BITCOIN): Each point is 1¢ (100 times less valuable than EURUSD)
Forextk (BTCUSD): Each point is 1¢ (100 times less valuable than EURUSD)
CryptoMargen (BTCUSD): Each point is 0.1¢ (1000 times less valuable than EURUSD)
It’s true (at least for me) that the cryptos have much bigger moves, but they’re less valuable at the same LOT size compared to EURUSD. So my question is, if a particular market (BTCUSD) is less valuable compared to another one (EURUSD), but it has much bigger moves, does that make it an inherently worse market compared to the other one?
What stops one from increasing their LOT size for the market that has much bigger moves but is less valuable?
Am I even looking at this correctly? Maybe better or worse are not the correct way to compare two markets. Maybe safer or less safer are better words? Or maybe the question should be which one is worth investing time and energy on?
Please tell me what I’m missing in this equation. Thank you.
That’s a good point, I didn’t add the spreads because these are all DEMO accounts and hence their spreads may not be the real spread one would see with a real account. But for the sake of transparency these are the spreads:
It’s called leveraging. Leverage is a tool used by traders that enables them to control a large amount of capital by putting down a much smaller amount. Unlike traditional investing, where you must tie up the full value of your position, with leveraged trading you only have to put up a smaller portion, known as margin.
And based on each price value, leverage varies differently.
Look these topics further, am sure theyll help you more with your question:
If anything, you’re missing the reality that the party you think of as a “broker” isn’t really a broker at all. It’s a counterparty. You’re not trading, you’re betting against them on the “prices” of their own products which they make up and control. For example, no currencies are actually changing hands when you “trade forex” with them.
Lol, no - not suggesting that at all (and sorry if my post sounded negative enough to give that impression!).
Over the years and decades the whole trading climate continually changes, of course.
If I were starting off now, and wanting to trade forex (which is a perfectly reasonable thing to want to do, of course!), I would - as many/most experienced traders would tell you in the current climate - look only at forex futures.
If not having enough capital to risk on trading them right away - and it does, admittedly, need a little bit more than you can start off trading spot/CFDs with - I would aim to learn, practice on demo, and then try to raise funding through a futures funding company (in this forum they’re usually wrongly known as “prop firms” and these days some of them even refer to themselves under that name, though they’re not really “prop firms” in the traditional sense of the words and it’s a hugely misleading and confusing name for them).
The important points are:-
Almost everything you learn for trading forex is exactly the same as almost everything you need to learn for trading forex futures, so there’s no wasted effort involved, and it’s not as if you’d be starting off a “whole new and different thing” - far from it. If you can trade spot/CFDs successfully, then you can trade forex futures successfully.
Nobody who switches from trading forex to trading forex futures (and a lot of people do, especially right now) ever switches back, which tells its own story,
Futures “prop firms” are nothing like CFD “prop firms” - they’re incomparably safer and better (I’m not saying that all CFD “prop firms” are crooked, but it’s a very, very shady industry, just like spot/CFD trading is.
The key point so many people misunderstand, or just fail to appreciate, here: if you can’t (at some point) trade forex futures well enough to pass a funding evaluation, then you can’t possibly safely and successfully trade forex anyway, so there’s absolutely no downside to trying to do it this way: the educational process is 99% the same, it’s WAY less risky and you end up dealing with an honest and transparent market rather than a world full of crooks and scammers (which is what most spot/CFD forex “brokers” are, as you can see from all the forum conversations about them and all the warnings in the “school” here about how important proper regulation is!).
I hope it helps. If it doesn’t help now (which it might not, depending on how “new” you are) then come back and read it again later, maybe? Good luck.