Trading the financial market can either make you rich or leave you broke. Basically, it all depends on your mindset, whether you’re here for a quick buck or a consistent return in the long run.
I was recently going through an article on Naijaloaded titled “Where should you invest your $1000 savings? The Bitcoin or Forex market.” I must comment that I was fascinated by people’s comments.
To start with, I feel the question is misleading. A better question should have been, as a newbie or experienced trader, which market is advisable to invest your $1000 savings?
So what’s my answer?
The best answer I can give to the above question is that you should never invest in what you don’t understand.
Trading Bitcoin or Forex is like every other business out there. It requires you to understand the fundamentals, which I will list below:
1. The market: A market facilitates trade i.e. buying and selling. And before you can have a trade, buyers and sellers must agree at a particular price, which is usually determined by the forces of supply and demand. The higher the price the lower the demand, likewise, the lower the price the higher the demand. It takes intelligence to know when to buy and when to sell.
2. Risk management: There’s nothing in life that’s without risk. It’s the failure to properly analysis investment risk that results in heavy losses. Therefore, it doesn’t matter whether you’re trading Bitcoin or Forex. You just have to answer this question, do you know the risk involved?
3. Potential returns: One thing most people lack when it comes to trading and investing is the ability to set a clear and reasonable return on investment (ROI). I have seen people message me and ask how much can I make with a $10 investment in Bitcoin. I always laugh and tell them to invest the money in a course or eBook instead, this is because that way they get more potential return.
You see, the truth is that any investment that gives above 20% ROI is a high-risk investment. And the higher the risk, the smarter you have to be. So how smart are you?🤔
Now, let me give a real answer to the question
Based on my understanding of Bitcoin and the cryptocurrency market, it’s far better for a Newbie to invest in it than Forex.
Below are my well thought reasons:
1. Bitcoin is a digital asset, unlike Forex which is a derivative. If you buy Bitcoin and the price drops, you can decide to keep it in your wallet and not sell until the price rally back up. Such is not possible in Forex as you can lose all your money.
2. Bitcoin is the best performing asset for the past 10 years. Yes, Bitcoin did outperform all major financial asset in the past decade. We have seen Bitcoin reach over 70000% return on investment since it’s inception, as reported by NewsBTC. Tell me, can forex produce such enormous return?
3. Digital currency is the future of money and digital trading. As at this moment, more than 10% of the world has heard and used cryptocurrency. These numbers are growing at a rapid pace, and it wouldn’t take long before the whole world jump on the bandwagon.
5. Bitcoin is more volatile. To a swing trader, volatility is big money. If you know what you’re doing, you can make a killing profit in both the sharp increase and decrease in the price of Bitcoin.
When I am asked, “Is real estate a good investment?” My reply is, “I don’t know. Are you a good real estate investor?” #richdad
— therealkiyosaki (@theRealKiyosaki) November 9, 2019
In conclusion, I believe the market you’re trading is not as important has the person trading it. Does the person understand the market? And is he a Pro or a Newbie?
I personally think most Newbies should invest in Bitcoin instead of Forex, this is because it’s a decentralized digital asset. You can decide to withdraw and keep it in your wallet, no matter what happens.
I hope you found this post educative. Kindly drop your thoughts in the comments below and share this post with anyone who could benefit.
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