Traders often argue over which way of trading is more profitable: on Forex or on stock market. There are widespread expressions: “It is better to trade on stock exchange because the currency market trading is more difficult” or vice versa: “I’d better work on currency exchange market ‘cause there one can earn faster”. There are a lot of people who adhere closely to these concepts.
What are the differences in trading on these markets? We are going to touch upon some specific features of both markets.
First of all, the size of the initial deposit needed for start varies. International currency exchange market requires only one US dollar to start with. At the same time, you need a substantial sum of money to trade stocks.
Secondly, Forex and stock markets differ in leverage. Stock trading provides leverage 1:2. In its turn, forex brokers enable clients to trade with the leverage equal up to 1:500.
Currency exchange market is ideal choice for those who want to cash their profit on the very day they have made it. Stock market is different; only traders, who are interested in long-term investments, can gain profit on stock exchange. It is an opportunity to earn in the long term.
A kind of advantage of working on Forex is its around the clock functioning. Stock market allows to trade only during certain hours. Moreover, stock market ropes on to the stock exchanges so a trading process can be halted due to some troubles on a stock exchange floor or according to the decision of a world’s giant, for example, the USA. It will never happen on Forex because trades are carried out by the participants who do not have any operating floor.
The only element which unites Forex and stock market is profit gaining by means of the Internet.
Study carefully the trading process on Forex and you will see a huge advantage of working on it. Forex will never collapse as a downturn of one currency leads to an upturn of another. Stock market is not protected from any kind of crises. It can also be exposed to the risk of swindlers, who can act in various aspects of stock market functioning. There is a method of taking a decision on sale and purchase – Inside. In the USA head of Enron Corporation was accused of falsifying accounting records in order to sell shares of his company at a high price as others were not aware of actual situation in the corporation. Insider information does not work on Forex so the market is fully protected against the fraudulence of such kind.
Please mind, that Forex volatility is much higher than the one of stock market. Gaps after the weekend are usual for stock exchange, but they rarely occur on Forex.
We can continue talking about distinctive features of currency exchange and stock markets, but iy is always a trader who makes a choice. A trader can earn on either Forex or stock market, the result depends on his/her goals, strategy and tasks.
