Forex stock trading market…
Trading with currencies goes way back in history, and it is basically the first market that was there. You have to know that before money, people traded goods and the value of the goods was predetermined, so you could exchange a bag of potatoes for two bags of garlic. Later you could buy some dishes for half a bag of garlic, or you could pay your worker in the field with two bags of garlic, half a bag of potatoes and a cup of some liquid thing. I am not really sure if that is the ratio, this is just an example. Anyway, trading currencies is that old. Nations also traded their goods, for example, northern nations didn’t have bananas, and southern nations didn’t have polar bear skin, so they traded that. Basically, again, they traded currencies.
International market for trading currencies is called Forex. It stands for “Foreign Currency Exchange Market”. Forex enables parties to take advantage of the fluctuations of the currencies in the world market in order to gain profit based on presuming how a specific currency will move in comparison to another currency. Currencies are traded as pairs, one currency against another.
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About the stock market
Among different traditional methods to earn money from investing is stock market. As it gives best opportunities for return of investment, it is probably the most difficult to participate in. The reason for that is the large number of participating companies and the daunting can be downright. There is the option to trade with mutual funds, or index funds, but that leaves low profits. Stock market is not an easy market to master. Were it as simple as that, everyone would trade there and gain millions of dollars. Yet, there are not many people who gained steady money with trading on stock exchange. In comparison with other trade markets, stock exchange returns 20/30% in short time, but it takes great risk.
About the Forex market
In comparison with the stock market, the Forex market is way simplier. It is true that stock market is more popular due to many movies made on the subject of stok traders and investors in stocks than movies about the Forex trading. That is also a reason to educate about forex trading in more specific ways. Also, you won’t find many TV and radio news about the Forex market.
For the Forex market, there is no and there can not be any central station, and it is by definition and in practice an open market. That means it is open 24/5, that is every day, whole day, discluding weekends.
The Forex market is a truly international market, which allows virtually everybody to participate in it.
Forex market deals with currency pairs. That means that you trade one currency for another one. There in stock market there are thousands of companies in every stock market, but in the Forex market, there are tens of currencies, but you don’t have to deal with all of them. More popular currencies are always enough for you to trade.
Many will agree that the basis for rather successful trading on the Forex market is developing a strategy and sticking with it. As currencies must rise and fall, when you stick to something, your turn has to come. For example, you analyze and decide on what currencies to trade, you stick to it until it happens. Of course that a loss can happen, but if you are careful enough and invest properly, there is small chance that a currency will disappear overnight, which isn’t impossible for a company whose stocks you bought yesterday. Also, you don’t have to trade with the popular pairs, you can decide on your own pair, which isn’t what most people is doing with stock trading. When a stock is popular, everybody buys. In the Forex market, you can really independently choose what to deal with.
Forex trading advatage
Forex gives you opportunity to trade 24/5, with no pauses. Stock market works only 8 hours per day, and while it is open in New York, it is closed in Tokyo. Forex is open all the time, so if it is Tuesday in New York, and already Monday in Tokyo, the market is the same, and it is open. Nothing can happen to disturb your trading plan, no break from afternoon till early morning can pause your progress.
This same advantage of the Forex market can be a disadvantage for a novice trader. It is most common problem for beginners, to stay awake overnight gazing at their screens waiting for something to happen. But you can find solutions for that problem here http://dailypriceaction.com/forex-price-action-course
It is simple and almost easy to learn
When comparing simplicity of Forex and stocks, it is actually two different worlds. Forex has eight major currency pairs, not that you can chose from more, but alone NYSE has got a list of more than two thousand units. This fact is what enables traders to turn their focus on fewer sides.
USD/EUR pair alone represent 30 percent of all pairs, 60% of pairs are made from 8 most popular pairs, and 30% are the combinations of all other pairs.
It is easier to get money
When it comes to comparing liquidity, the Forex market has higher volume traded than the stock market, which actually means that on average it is easier to spread investments in the Forex than stocks.
Ability to exit the Forex market is maybe the major difference from the stock market, at least in terms of worry and danger of heart attacking you.
Forex has been growing firmly in recent years. O.K., fairly said, organized stock market is older, but in the last 15 years it has seen a huge growth with constant rising of popularity, while the stock market dropped a little bit, at the level it was before 2006.
The possibility to make huge profit with small moves – due to leverage that it has – makes it interesting for many traders enough to start trading at the Forex market. But, as everywhere, you have to know how to use the leverage in the Forex market. If you are not careful and misjudge way too casually, you could lose.
What do you think about forex and stocks trading ?