Traditional Finance VS Decentralized Finance

peter.nguyen

Trader
Apr 6, 2022
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Traditional Finance vs Decentralized Finance

Trading has been taking place on a global scale since the 18th century and has continued to be an excellent earning opportunity to this very day. Over time, especially in today’s digital era, with the availability of online trading coupled with the increasing number of assets on the financial market, financial trading is increasingly becoming popular with the general public.

While trading in digital assets and in traditional financial markets have a number of similarities, they differ on both fundamental and practical levels, which warrants contrasting assessments of value, risk, and opportunity. Let’s compare the trading aspects of traditional finance and decentralized finance one by one.

Trading in Traditional Finance Markets:

The traditional finance markets consist of various different assets like Forex, stocks, Indices, Energies, Metals (Gold & Silver), Commodities and so on. Among the other financial markets, the foreign exchange market, also known as the FX market, Forex market, or currency market, is very popular. It involves the exchange of national currencies against one another on a global scale. As an example, Euros can be exchanged for US dollars, or British pounds can be exchanged for Japanese yen.

Trading on the financial markets can be carried out in many ways, and it usually depends on what asset class you choose to trade. In order to participate as a trader in traditional financial markets, first, you have to choose your trading asset and open a trading account with a broker. Choose a broker that allows you to trade all financial assets on one platform if you want better returns and easier access. AximTrade stands out as the best broker in terms of its reliability and excellent trading conditions, offering Forex, Stocks, Indices, Metals, and Energies, and facilitating in-depth market analysis using various tools accessible through the MT4 platform.

A traditional finance market is an online marketplace where brokers, traders, and dealers trade financial securities and assets by using a broker’s platform. Trades are made directly between buyers and sellers. It is important to understand how traditional finance markets work, including their different exchanges and trade sessions, to be able to trade successfully. There are several large exchanges, including the New York Stock Exchange and the Chicago Mercantile Exchange. Foreign exchange markets, which trade approximately $5 trillion every day, are the most significant spot trade markets worldwide.

In traditional financial markets, the exchange is responsible for receiving and matching orders and maintaining a fair and orderly market. Instead of processing financial flows, exchanges process information transfers. Dedicated brokerage accounts are used to store funds and assets, with liability shared between the regulated entities: the exchange and a bank. Client funds are always stored in the broker’s segregated accounts and are never handled by the exchange.

We’ve put together a list of 10 Things You Should Know Before You Open A Forex Account to help you get started with trading more effectively. Check it out!

Source: Traditional Finance VS Decentralized Finance