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Cryptocurrency vs stock trading

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June 24, 2022

5 min read

BeginnerCrypto BasicsTrading


The stock market and cryptocurrency market both offer numerous possibilities. But knowing the differences between the two is useful in developing a larger perspective about investing in general and helpful in refining one’s strategies. A few differences you need to consider between the cryptocurrency market and the stock market are the hours of operation,  regulations, and volatility.  

Cryptocurrency vs stocks; What’s the difference?

To the untrained eye, cryptocurrency market charts seem to be the same as those of the stock market, and many of the trading terminologies used also sound the same. But the two markets are in fact, completely different, and also behave very differently from one another.

First of all, the stock market deals in company stocks and shares while the cryptocurrency market deals in digital assets. Company stocks are often those of recognizable household brand names such as utilities or fast-moving consumer goods. On the other hand, cryptocurrencies have relatively newer applications since they are still part of an emerging technological industry. Here are a few more differences that set these two worlds apart:

Cryptocurrency markets operate 24/7, while stock markets have a set schedule

They say that “crypto never sleeps” and this couldn’t be more obvious by just looking at the difference between when these two markets are open for buyers and sellers to execute orders. 

The cryptocurrency market is open 24/7 and is never closed. Never–not for Christmas even. Investors and traders can execute buy or sell orders regardless of time zones and regions, allowing them to react to news and price changes immediately.

Meanwhile, the stock market operates on a set schedule based on the trading hours of the stock exchange where the company is listed. The stock market is subject to local holidays and can also be closed due to specific events, such as natural calamities or outbreaks such as the Covid-19 pandemic. 

These are differences to consider because you will need to know how much time you can allocate for trading on either market. Some also say that the stock market is the most active during the first days of the workweek, while the crypto market is most active during weekends when the stock market is closed. 

The cryptocurrency market is more volatile

One of the key differences between cryptocurrency and the stock market is volatility, which is defined as the extent to which the prices of a financial asset can change in a market. 

Because the cryptocurrency market is still in its emerging stages relative to the stock market, it naturally comes with more volatility. In a span of a few hours or days, you can see the prices of coins and tokens go up or down multiple times. 

Meanwhile, these huge price swings rarely occur in the stock market without huge catalysts and often take months or years to take effect. This is crucial to understand as investors and traders have different tolerance thresholds for volatility.

Both markets have exchanges but offer different instruments

To participate in the stock and cryptocurrency markets there are usually exchanges that allow you to buy or sell your preferred assets. These exchanges are in charge of efficiently relaying price information and executing orders with the least amount of slippage possible. 

However when it comes to the stock exchanges, shares of companies are traded in whole units. These shares represent ownership or equity of a company or corporation.

Meanwhile, when it comes to trading cryptocurrencies, coins or tokens allow for fractions of a unit to be bought or sold (rather than the whole token). Similarly, a crypto holding represents a share of the network or a share of the total supply rather than a company or a corporation. One’s ownership of coins or tokens can also be used to participate in different networks and protocols. 

Buy or sell orders are similar in both markets

In both stock and cryptocurrency markets however, executing buy and sell orders are done in a similar manner. Limit orders, market orders, and stop-limit orders are usually available on both crypto and stock exchanges. In PDAX, such features are available in the web exchange and mobile app which allows users to preset their market and stop limit orders so they can be guaranteed of having their trades executed once their target prices are met, even when they aren’t constantly monitoring price movements.  

A limit order is an instruction sent to the exchange or broker to execute an order at a specific price or better. A market order is an instruction sent to buy or sell at current prices. Lastly, a stop-limit order is a limit order placed when a specific price or “stop” is met. 

It is worth noting however, that in the cryptocurrency trade, there are also “decentralized exchanges” (DEXs) which allow for trade to occur without buy and sell orders. DEXs instead rely on liquidity pools which are kept supplied by users themselves for a small fee every time someone trades tokens for another. 

Stock markets and cryptocurrency markets offer plenty of possibilities for you to earn income. However, understanding the differences and the risks between the two will help you decide how much of your hard-earned money you would want to allocate to either one and can also be very helpful in your trading or investing journey to prevent costly mistakes from happening.

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DISCLAIMER: The statements in this article do not constitute financial advice. PDAX does not guarantee the technical and financial integrity of the digital asset and its ecosystem. Any and all trading involving the digital asset is subject to the user’s risk and discretion and must be done after adequate and in-depth research and analysis.

About PDAX

PDAX is a BSP-licensed exchange where you can trade Bitcoin, Ethereum, and other cryptocurrencies directly using PHP!

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