While the line between the two financial institutions has begun to blur, they still do possess their own individuality and the differences do shine very, very brightly.
I believe that you should be looking at the two markets very closely, as time passes. This is a contemporary situation and the future of the world's economy is right around the corner of a new revolution.
Initially, it was @cranium.leo's question in my previous post that made me wonder about the differences between the two while keeping in mind the modern blurring of the lines.
For someone looking into getting on to the two most lucrative ways of achieving financial freedom, it is important to respect the differences between the markets and make a calculated decision based on them.
It is like a treatment plan that a doctor prescribes, which is based exclusively on a filtered down and tailored diagnosis. Think of the differences as the differential diagnosis and the treatment as the investment choice.
During my time within the forex world, I thought the volatility of the market was tediously torturous. And then I got involved with crypto, and forex seemed like a walk in the park.
There is nothing akin to the volatility of the crypto market. It is busy, it is unpredictable, it is crazy. For any investor, this is the outstanding issue between the established stock markets vs. the growing crypto market.
The volatility of the crypto market is a double-edged sword. It is a moneymaker and a wallet cracker, at the same time, depending on your investment strategies. My opinion is to make stop-loss your best friend.
While many argue that the volatility of the crypto market is incredibly dangerous and negative, I beg to differ. The very volatility is the reason why people get a 3000% profit within half a month's time. But if you do not make informed decisions and investments, you can expect that green to turn into a -3000%, too.
The reasoning could be because of the small number of people involved in the market. It makes the difference between the existence of whales and small traders very vivid. With whales factored out, the crypto market is still very similar to the stock market - charts and news.
On that note, let's put volatility to number 2 and move to the number 1 difference.
The first and foremost difference is regulation. For instance, the biggest stock market in the world is in the US, which is regulated by the SEC. This is important in a way if we look back at the history of the stock market when DIC initiated it.
As the idea grew in popularity, more and more companies "listed" themselves and many were simply a money-making scam. The regulations also derive many of the security features that protect investors, like market manipulation, insider trading, and so on.
However, the trust in the stock market's regulations has been dwindling with time. The recent $gme and wallstreetbets incident brought to light some of the loopholes that still exist with the backup of the regulatory boards.
This still doesn't overshadow the fact that the cryptomarkets are still not regulated, not even close to the stock market. Albeit many top-level exchanges are trying their best to get regulated. One of the latest news is of a top-level crypto-exchange trying to get in liaison with S&P of the stock market.
Legality goes hand in hand with regulations. But I want to keep it on a separate point because I see them as two separate things.
While almost every country has its own stock market, and almost every citizen is given the right to trade in the market, crypto is still in the backhand position. Many countries have yet to declare crypto as legal. Regulations can only come into play after crypto is legalized.
Some countries allow individuals to hold crypto but deny them to be traded, some allow all uses except providing any legal or procedural aid, and others outright have banned everything to do with crypto.
This puts the cryptocurrency market in a significantly tougher position as compared to the stock market. However, with more and more governments aligning with the crypto movement, I believe we will see a major breakthrough in the near future. Possibly, within this decade.
This is a very easily overlooked difference between the two major markets. This is also a very important difference, IMHO.
The crypto market, according to its specific country, has a timed and dated working hour. They open up and close up accordingly. No movement happens during the closed hours. It makes for a good strategic break and many people do implement different tactics based on these hours.
On the other hand, the crypto market is open 24/7/365. No breaks. No off time. Even forex closes down. But not crypto. This makes it the only market where an investor has opportunities, all around the clock, 24/7/365. It also means that there is a lot more chance to make money in the crypto market.
The differences are soon going out the window and the financial world will inevitably tilt to raise the crypto market to or beyond the established advantages of the stock market. However, with decentralization and blockchain at the heart of crypto, it will be interesting to see how things turn out in the future. The stock market lacks decentralization and the security of blockchain, which puts it at a disadvantage.
Still, if you are looking to begin your trading adventure, make sure to do the research first. Learn about the two markets and understand what they do. Opportunities lie on both ends. Figure out what kind of trader you are and what type of investment/trading strategies fit your personality. Make a demo account. Try both the markets and see what flavor of money you like.
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