Which is better, stock or forex?. First, let’s Talk About Forex
In the forex market, you buy, sell, and exchange currencies. The price currencies in which are exchanged are dependent on the exchange rate.
Between cooperate companies like banks, as well as individuals, travelers, and individual retailers, trade is done several times a day.
The price the currencies are exchanged changes because different event all around the world is a factor that influences exchange rates (that is the value of a currency compared to another one),
Meanwhile, price is determined by the demand and supply rate of a currency, the more there is demand for a currency, the more the price increases, and if there is a low demand for a currency, the price also reduces.
In forex, many currencies are always traded, but seven main pairs which are formed out of eight currencies are been traded most times, some other currency pairs also could be traded but not very often.
Therefore, knowing that a trader performs lots of trade in a day, they are thereby allowed to give small deposits because commission fees are much more frequent.
Customers are seen as traders in the forex market, knowing that a trader performs lots of trade in a day, they are thereby allowed to give small deposits because commission fees are much more frequent.
In the stock market, shares of a company can be bought or sold, and when that happens, it means you have a part of the company,
the percentage of your ownership of the company depends on how many shares you have of that company, 200 billion dollars is usually traded daily in stocks.
The opening time for the stock market is few hours, usually 9. a.m to 4. p.m Eastern Time.
Stocks of companies are always registered in specific countries, which limits them to register on local exchange officially, but the stocks are also sold abroad.
Customers are referred to as investors in the stock market, Due to nonfrequent trades of the investors, they are made to make large deposits to make the commission big.
I believe we quite understand what forex and stocks do mean already, then, let’s see what benefits one stands to gain if forex is opted for.
PROS and COns Of Forex Trading
Forex Trading Pros
- The forex market opens 24 hours, five days a week, this allows traders all around the world with different time zones to trade at any time preferred by them.
- It doesn’t cost much to start trading in forex because little deposit is usually required, thereby making it easy for new beginners to start.
- Traders trade equally if there is a rise or fall in the market price.
- Commissions are usually minimal, or not added by brokers to trade currencies online, compensation to the brokers comes from the spread of a currency, i.e The bid for a particular currency’s difference from what is asked to be paid on the currency is the spreads and they are always minimal.
- It’s almost impossible for there to be manipulation in the currencies, either by anyone with large currencies or by a bank due to the forex market’s large size.
- The forex market is fast and efficient because you can trade with not just those around you, but with as many that are into forex all over the world.
- Currencies are easily sold in forex because many people like to get cash, so, forex has better liquidity compared to other markets.
- A reduced number of currencies to trade makes it easy for traders to be familiar with, get a better understanding of the various pairs, and later deduce which works better for them.
- Due to the large volume, which is five trillion dollars being traded on daily basis, traders tend to trade at the desired price.
CONS Of Forex Trading
- It is not well centralized due to the huge number of participants, because banks in different countries have a reserve of their local and foreign currencies.
- Forex is limited with options of the existing currencies, one can diversify the currencies, but new ones usually don’t come up.
Pros and Cons Of Trading Stocks
STOCK – PROS
- The dividend of the trader’s share of the company is given to him/her, depending on the trader’s share in the company, this is done annually or quarterly.
- In stocks, the options are more, than in forex, because there are thousands of companies that are registered.
- Stocks volatility is higher than currencies, i.e. measuring how frequently the price of assets change, it is more volatile because the price of assets changes significantly every day.
- Positions are held for several days or months, years, or even decades, making them suitable for long-term investors, It is to be noted that holding unto stock for a long period increases the possibility of better payout.
STOCK Trading CONS
- the market opens for just 8 hours on weekdays
- Up to 200 billion dollars volume of currencies is traded on daily basis, which is lower compared to the forex market
- Trading at a specific price rate may be difficult in the stock market.
- Commission fees and spreads usually are charged in the stock market, the fee is between five to ten dollars for a given trade makes it not profitable for a trader with a small amount. This factor in stocks makes it challenging for Intending investors with a small amount, thereby making stocks, not beginners friendly.
HOW TO MAKE MORE INCOME FOREX AND STOCKS, HELPFUL TIPS.
They are, Fundamental and technical analyses, they both guide you to simply sell higher than you buy while trading.
In technical analysis, past price or volume is used to predict price in the future, in this analysis, it is believed that history repeats itself, the analysis can be applied in both forex and stock markets, but it is mainly used by forex traders.
Net profit, equity ratio are values used to examine the financial performance of a company, checking if people are interested in the company, evaluating if the company grew the previous year to predict its future growth, also knowing how many will benefit from the company, all these values are kept into consideration in fundamental analysis.
Forex and stocks have the same technical analysis but both have different fundamental analyses.
Local trading gives a bit hedge over international traders because local politics influence stock prices and exchange rates, if the political situation of a country is well understood by a trader, future policies are always predictable, and policies effects are also known on exchange rates, regardless of safe playing local trading gives, its advisable for traders not to limit to local trading alone.
Those who trade forex read to gather information on the news, helping them learn more about politics for appropriate predictions on how it will affect the exchange rate.
Investors in Stocks on the other hand gather information about the company they have invested in, giving them knowledge on how well the company is doing, it also gives them clues on changes in stock prices.
Trading in both forex and stocks requires skills, acquiring knowledge by doing research, learning different strategies, and choosing which works best for you in other to thrive in the financial market.
Stock or Forex Summary
Getting no Experience, knowledge and no tools to divulge into either of them could be dangerous, as there might be much more losses than the wins, most traders apply their forex idea or knowledge in Stocks and end up losing at the beginning, also, presuming to be safe doesn’t mean one will be safe in it, financial markets are often difficult to predict, regardless of which, either forex or stocks.
But traders tend to adjust as they continue, because of volatility in both forex and stock, traders get a long-term strategy and not a short one.
For many obvious reasons Forex has more advantages than stocks, which is why many more people go into it other than stocks, Stocks nevertheless have their advantages too.
In a nutshell, as enormous as the benefits of forex look, trying both out with the right knowledge, mindset and insight is the best way to reach the profitable conclusion on which to choose and settle with.
For me and my household, nothing beats forex.