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News: Welcome to eMoneySpace! Dec 04, 2020 05:17 PM




Stock vs Forex Trading: Which investment is most riskier?
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Author Topic: Stock vs Forex Trading: Which investment is most riskier?  (Read 2140 times)
rogarfx
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Jun 18, 2019 12:05 PM

The Traders and investors often have difficulties to figure out which marketplace to channel. In such situations, the trader's trading style and risk tolerance come into play. Buy and hold traders, for example, are more suitable for the stock market, while short-term investors value definite price volatility in Forex trading.

So, today I'll be making a comparison between Stock trading and Forex trading and logically show you which is better.
Therefore, without any further ado, let's dive right in.

Stock Trading vs. Forex Trading

There are no strong answers to which questions are better because there will be weaknesses for each path. Everything comes down to features that are important to you.
The stock market describes sellers and buyers who trade stocks or shares. Shares in the company offer share ownership.

These transactions are mainly handled on the stock exchange. The company views stocks as a way to increase capital. The market is regulated and transparent, and buyers benefit from this convenience when trading with sellers.

The Forex market is typically decentralized. This includes many trade networks of participants from all over the world. The main players in this market include hedge funds, central banks, and investment banks. Although the stock market is very popular, the Forex market ranks as the largest financial market in the world.

Stock Trading vs. Forex: Comparison

Size
 
The market is mainly different in volume. According to the fix daily report, around $ 5 trillion is traded on the Forex market every day with most of the trade going around major pairs such as EUR / USD and AUD / USD.

When world stock markets are combined, they average around $ 200 billion a day. The high volume of the forex market means that traders can run their orders quickly and easier and closer to the desired price.

Having more liquidity at each price tag better empowers traders to enter and leave the market.
Liquidity
 
The Forex market is very liquid because of the many participants involved in trading at any time. Large and popular stocks in the hands can also be very fluid.
These stocks are mainly related to what is called "blue chips", which describe well-established, safe, and well-known companies. Shares that are not from these companies can be far less liquid.

Liquidity makes instruments easier to trade. Superior liquidity generally tends to be proportional to tighter spreads and lower transaction costs.
The main pairs of the Forex market tend to have very low spreads in addition to low transaction costs compared to stocks, and this is a fundamental advantage.

Focus Narrow vs. Wide

The scope of the traders' focus is another major difference between the two markets. If you are worried about individual stocks, you will be fine by evaluating relatively few variable factors that are directly related to the company and market forces in a particular sector. You can narrow this information to metrics such as cash flow and debt levels.
The focus will be broader on the Forex market.

Currency represents aggregate economic performance. Forex traders pay more attention to macroeconomics.
Metrics in this market include inflation, unemployment, and GDP. If you trade Forex pairs, you trade multiple currencies simultaneously. As a trader, you will pay attention to both economies to determine which ones to buy or sell.

24-hour market

Forex is opened on the table, meaning that transactions do not occur above traditional exchanges. Trade is driven through the interbank market, and therefore, can occur during various trading sessions and working hours from various countries around the world. Forex traders will have virtual access to the market for 24 hours. The main stock index is traded at various times and is influenced by various variables.

Margin and leverage
 
Forex brokers offer superior leverage of up to 1000: 1. Traders who physically trade stocks are likely without the benefit of leverage. If you use Contracts For Difference (CFDs) when trading shares, you can trade on margin...

Margin and leverage
 
Forex brokers offer superior leverage of up to 1000: 1. Traders who physically trade stocks are likely without the benefit of leverage. If you use Contracts For Difference (CFD) when trading in shares, you can trade with margin.

Minimum commission


It's common; practice for Forex traders do not charge commissions. Traders make their margin on the spread, calculated as the price between buying and selling prices.
Traders involved in the stock pay spread alongside the commission to the broker. Forex spreads are also more transparent compared to other contract trading costs.
Conclusion

The choice between markets depends on your goals and your trading style. Forex may be better for people who value macroeconomics and who pay attention to transaction costs. The internet has exposed traders to various markets.

The decision to focus one's efforts on Forex, contracts or shares often depends on convenience, account size, and risk tolerance.

So, if you have any topics in mind and you want me to cover it from you then please let me know.
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Meh-La

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Reply #1: Jun 23, 2019 07:37 AM

Forex is investment in a country

Forex trading is the indicator on financial system worldwide. USD/EURO/GBP/Gold/Silver are the pillars of trading and business worldwide. When you buy, for example US dollar, you show your confidence in US economy. Gold and Silver is universally accepted investment which protects people's wealth during wars, inflation, natural calamities (earthquakes, tsunamis etc..), economic crisis. So investing in forex is investing in a country and not in a company. In stock markets, you invest in a company and 150 of Fortune 500 companies have closed down since year 2006.

Exports and imports between 2 countries determines the value of their currencies at which they are traded at. More exports for a country will make the currency stronger
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BeverlyCHarrell

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Reply #2: Jul 09, 2019 12:22 AM

I think it is depend on person to person..
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ramylawrance
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Reply #3: Jul 09, 2019 02:37 AM

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« Last Edit: Jul 09, 2019 02:37 AM by ~Money~ » Logged
Pristromer
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Reply #4: May 19, 2020 07:20 PM

I think it depends on the person himself how he considers both Forex and stocks and how he can deal with them. Forex is a great business and we can make lot of money with it if we have skills and can give time to it.
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Passtry
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Reply #5: Jun 15, 2020 04:19 AM

forex more risky. Stock more stable and exists for a long time
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rosstaylor9855
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Reply #6: Jul 04, 2020 04:19 AM

Based on my opinion, it depends on the person himself how he considers both Forex and stocks and how he can deal with them. Forex is a great business and we can make lot of money with it if we have skills and can give time to it. Leverage trading in both platforms are higher riskier.
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dilanz055
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Reply #7: Jul 04, 2020 05:10 AM

Quote
I think it depends on the person himself how he considers both Forex and stocks and how he can deal with them. Forex is a great business and we can make lot of money with it if we have skills and can give time to it.

Exactly, it always depends on each person.
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Marisar20
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Reply #8: Jul 04, 2020 09:50 AM

I believe that it depends. Smiley
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looky
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Reply #9: Nov 18, 2020 12:36 PM

forex market is more liquid and thus you can get higher leverage.
Stocks can easily jump or plummet over 5% within a day.
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bonnieshona
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Reply #10: Nov 26, 2020 01:43 AM

If you invest in the broader markets like the S&P 500 or even various sector funds like healthcare, you can make or lose some money but you won't go broke. Your trading account will not ever go to zero.

With Forex trading, your account can go to zero and potentially even lower so, you end up owing the brokerage new funds. Most brokers will protect themselves and you from negative account outcomes by closing out bad trades. Over use of leverage is a common new trader mistake and problem with Forex. High leverage is a risky temptation for any trader but most experienced or pro traders have learned to resist the use.

In conclusion; It's less risky to invest using the safety of automatic diversification provided by broader based stock funds than it is to invest in currency movements through Forex trading.

Trading is different than investing. The Forex market offers more trading opportunities and profits for some traders. Most people quit Foex trading before achieving consistent success. It's difficult to learn and find the exploitable trading opportunities. And, proper trade and money management per trade are also critical to any success.

You will have to practice the same disciplines with stock trading but simply investing in index stock funds allows you to do nothing more. Time and the historical norm of companies growing and stocks rising in share price are on you side. It won't make you rich quickly but it will slowly make your go.

That's what most of us do. It's called buy and hold investing. We ride valuations up and down. We trust that the markets will return stronger and bigger after each drop. And, so far they have. It's very likely that there will be a Dow Jones industrial average at 50,000 some day and probably 100,000 another fine day in the far off future of business and investing.
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bonnieshona
fozzter7
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Reply #11: Dec 02, 2020 11:51 AM

Sometimes stock trading is way more effective than simple Forex operations. But it also depends on your tools, that you're using for such trading.
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