Forex vs. Stocks

Remember that both stocks and forex trading involve risk. Forex trading is not conducted on a regulated exchange and as a result, there are additional risks associated with forex trading.

Though stocks were traditionally viewed as an investment, recent volatility and instability has led to stock trading taking on a more speculative role. Many stock traders are also trading another speculative market with many differences – forex. Instead of trading stocks of individual companies, traders are switching to trading currencies in the world’s primary market. Greater leverage, sophisticated software and strong market trends have led many former stock traders to explore the benefits of currency trading.

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GREATER LEVERAGE

Forex trading provides greater leverage than is found in traditional stock trading, which allows traders to control larger positions with smaller amounts of capital. This also allows you to trade the same size positions you might take with a stock broker, while leaving you with more available capital to trade more markets.

NO MIDDLEMEN

Currency trading is done by the trader, online. By trading directly, a dealer and a primary market maker, there are no extra parties between you, the trader, and the buyer or seller of the currency pair. This elimination of the middleman can save traders in time and fees. This is different than the stock market, where you may deal with a broker and the exchange, both who charge fees and commissions. This translates to quicker access and cheaper costs for currency traders.

8000 STOCKS VS 4 MAJOR CURRENCY PAIRS

There are approximately 4,500 stocks listed on the New York Stock exchange, and another 3,500 on the NASDAQ. Which are you going to follow? Do you have time to research all the companies? In spot currency trading, there are 4 major currency pairs – EUR/USD, GBP/USD, USD/JPY and USD/CHF. If you want, you can branch out to the second-tier currencies. But most traders choose to concentrate on the major currency pairs. So choose your currency pair. Decide if you’re going to buy or sell. Then spend your afternoon on the golf course or with your family.