Difference Between Forex and Stocks Trading

Difference Between Forex and Stocks Trading

Posted on March 9, 2015 Admin

There are many benefits and advantages of trading Forex over stocks, the main one being that the Forex market is meant for both short-term as well as long-term gains while stock market works only for long-term investments. The reason behind this is that the Forex market operates all twenty-four hours, all weekdays, monday till Friday midnight so you can take your positions anytime day, noon or night and can also close it just like that unlike stock markets which has restricted opening hours, (most of the countries have it as 9.30 morning till 3.30 noon) for trading and order processing. An experienced trader knows that to have complete control over his positions, his trading and his decision-making, its important to have an open counter all the time, as trades do get stuck for longer hours and even over a day sometimes. This lack of facility of an all time open market makes it hard to make gain in stocks over short period, hence in comparison Forex stand tall as it is open all the time, so you get to decide when you want to take your positions, how long you want to hold it, when you want to close it and when it is that you want to not trade and simply relax.

Besides this, let me also brief you on a few other areas where Forex is better than stocks for trading benefits. A good comparison can be over the commission and transaction costs which are ways too low in Forex (where you pay only the spreads, usually about 0.07%) as compared to stocks (where you pay high commission as well as the call and put differences, mostly about 0.1%). Similarly, there is no clearing fees, no exchange fees, no government fees and no brokerage fees for a Forex trader, hence making the cost of trading highly effective. The availability of extremely high Leverage in Forex, (as high as even 2000:1) makes it easier for traders to buy and sell in much heavier lots even with small trading capital and make quick big gains unlike stocks where the leverage is restricted to 8:1 or maximum 10:1. This means that the stock trader needs big trading capital, most of it his own, to be able to take his positions and the worst part is that he will need to hold his positions for very long durations (like a quarter to even an year), so he is most likely to find all his money invested and then there being no work for him besides waiting, waiting long, waiting long for like almost an year.

There are two more Important features worth a comparison that the stock market can easily be manipulated by a big fish or a club of big investors but not Forex as Forex is global and no one , just about no one can corner the market solo. This means that not only is a small trader as powerful as the big one, there’s also the fact that as long as you know your trading, your money is always safe. There is no threat from external investment entities, no matter how big they are!

Another high level betterment in Forex is the fact that it’s highly liquid. Since you are dealing straight in cash currencies, the facility of single click disposal of your holding is always at your command unlike a day-trading Stocks trader who often finds himself not being able to close his trades in time for lack of liquidity. In Forex, you are never “stuck” in a trade for not having a buyer or a seller as what you are holding is pure cash and you are always selling it to a Bank, a bank that never says ‘no’.

Coming to an end, the only area where Stock market may be safer than Forex for a beginner is that Stock market has no fakes firms and no cheats. All stocks are listed and all brokers are duly regulated which is not the case with Forex. It’s easy for a newcomer to get trapped with an unregulated Forex broker or even a Non-existent Forex broker with just a fake website. But having done your Vigilant exercise on this with the regulatory authorities in your country or even offshore, You will always see that in the purview of the above mentioned facts, features, facilities and comparisons you always have more than one reason to choose only Forex as your trading career. Full time or part can only be your next choice!

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