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Forex Trading or Stocks Trading
Written by: PaxForex analytics dept - Friday, 25 September 2015 0 comments
Today's investors and active traders have access to a growing number of trading instruments, from tried-and-true blue chips and industrials, to the fast-paced futures and forex market. Deciding which of these markets to trade can be complicated, and many factors need to be considered in order to make the best choice. The most important element may be the traders or investor's risk tolerance and trading style. For example, buy-and-hold investors are often more suited to participating in the stock market, while short-term traders, including swing, day and scalp traders, may prefer forex market.
There are some obvious differences between the forex and stock markets which we all know. The forex market is open 24/5, the stock market is not, the forex market allows you to use very high leverage, the stock market does not, the forex market allows you to day trade from 1 USD, the stock market does not, the forex market allows you to easily enter short positions, the stock market does not, etc. Evidently it seems that the forex market has much more potential for “large quick profits”.
Which is a better market to trade, Forex or Stocks? A professional trader will probably make money regardless of the market as long as there are enough buyers and sellers in that
particular market to produce meaningful trends every day or week or month. In fact, changing markets constantly is not healthy for the trading account performance. It is always best to stick to the market or few markets that you know best have tested enough and feel comfortable trading.
Some investors use currency trading as a substitute for trading in the stock market. For one, trading in the foreign exchange market can be cheaper than trading stocks, especially when you first start out. You can open a forex account on as little as two hundred and fifty dollars, though starting with at least one thousand dollars is more advisable. But even this increased amount is still cheaper than starting to trade on the stock market generally is, as you usually need several thousand dollars to buy stocks to trade.
The decision to trade stocks, forex or futures contracts is often based on risk tolerance, account size and convenience. If an active trader is not available during regular market hours to enter, exit or properly manage trades, stocks are not the best option. However, if an investor's market strategy is to buy and hold for the long term, generating steady growth and earning dividends, stocks are a practical choice. Regardless of which instrument(s) a trader or investor selects, the decision should be based on which is the best fit.