Why choose Forex when there are so many stocks?
Novice investors who have decided to try themselves in the field of trading are sometimes lost and cannot make a clear choice. It concerns trading instruments – Forex, stocks, CFD, crypto. It is very difficult to choose between them and everything comes with experience.
Forex has become a very popular form of trading in recent years and at some point has already surpassed stock trading. In this article, we will talk about them and basically emphasize the advantages that Forex has over stocks.
Feature of the stock market and Forex
It is quite difficult to make a choice in favor of stocks or the foreign exchange market without the help of a professional. Before establishing the difference between them, it is worthwhile to learn more about their features. Despite the fact that both markets are directly related to stock trading, they are completely different from each other. However, even after studying the strengths and weaknesses of them, it is impossible to impose your opinion and say with precision which exchange is more suitable and will be beneficial to a particular trader.
It should be noted that the difference between Forex and the stock market can be noticed from the first minutes of being on the platform due to such an aspect as the organization of the workflow. The participant has the opportunity to immediately evaluate the offers of stock brokerage companies that have a fixed requirement – the minimum investment level. To cooperate with a rating intermediary firm, a trader should have a decent amount of money. At this time, dealing centers specializing in conducting financial activities on Forex offer more loyal conditions, therefore, to start trading on the foreign exchange market, you will need a small deposit – from 1 dollar. This is almost always a minimum for every broker on Forex and if you have a look at T1markets reviewed by experts the same concept goes for this broker as well and they always encourage traders to start trading even if they have a low amount of money.
The Forex market has not settled the topic of using the taxation system, therefore, paying taxes or refraining from the business is purely individual. It will be quite difficult for the relevant authority to force the depositor to make a gratuitous payment. If you compare Forex and the stock exchange based on these two criteria, then you can make a bold statement that the foreign exchange market is an excellent area for traders who do not have a lot of capital.
At this time, the stock market is represented by a more serious platform suitable for wealthy investors with experience in this industry. Registration on the stock exchange is an important operation that a future investor must go through. Creating a personal account in the Forex market is considered a quick procedure that will take no more than 5 minutes. Unfortunately, one can only dream about the promptness of registration on the stock market. The average time required to create an account varies from 10 to 14 days since this requires going through a number of stages: filling out an application for creating an account; clarification of personal data through a telephone conversation with a company manager; visit the broker’s office to sign a cooperation agreement. From this, we can conclude that registration on the stock exchange is a protracted event. It is another confirmation of the platform’s purpose for depositors who have outgrown the foreign exchange market.
After the main organizational aspects of the work have been considered, you can begin to familiarize yourself with trading on two popular exchanges. Among the main indicators, it is worth focusing on more significant ones.
Trade volume
There is no clear framework and restrictions on Forex, which cannot be said about the stock market because before concluding a certain contract, the trader is invited to study and conduct a technical analysis of the real size of the transaction.
Limit orders
At the sites under consideration, the methodology for carrying out these operations has a significant difference. For example, when placing an order with a limit in the foreign exchange market, assets are sold at the bid price, and the purchase is made at the asking price. Such a position on the stock exchange automatically promotes the investor to the role of a liquidity provider, that is, makes his orders available to all market participants. Even after considering the key features of the two markets, it is difficult to give an unambiguous answer in which exchange is profitable and productive because each of them is individual and operates according to unique algorithms.
What is the difference between Forex and the stock market?
It is known that the securities market is represented in the international sphere by two major exchanges: New York and NASDAQ. To date, trading on these sites involves the placement of about 5,000 shares of various companies and holdings. To make the right choice and conclude a profitable deal, the investor will have to study all the current offers on the stock market.
Dealing centres on Forex offer trading operations using several dozen currencies. Among experienced traders, four currency pairs are especially popular – EUR/USD, USD/JPY, GBP/USD, AUD/USD. They are effective and besides, it is much easier to analyze the trends of such a number of monetary standards than to study thousands of stocks around the clock. This is perhaps one of the important advantages of the international currency market over the stock exchange. In addition, there are a number of comparative characteristics of the resources under consideration, which can have a serious impact on the trader.
Conclusion
If we go back to our main question of why a person should chase Forex over stocks than these criteria that we have reviewed in this article make sense. Of course, it does not mean that Forex has the upper hand over stock trading, but there are certain indicators that make Forex better than stocks.
