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Author Topic: What is better, stocks or forex trading?  (Read 12 times)

thufly

  • Guest
on: December 05, 2023, 02:56:37 PM
What is better, stocks or forex trading?

Stocks and forex are two major asset classes in the financial world, what are the similarities and differences between them?

Stock trading is probably the most popular form of trading. Traders buy shares of a company and then sell them when the price rises to a certain level. Often shareholders have rights that come with owning shares, such as receiving dividends when the business is doing well.

Forex trading involves buying and selling various fiat currencies. Forex traders use currency pairs with the idea of ​​making a profit and buying one and selling the other as the price changes.

Stocks and forex have some similarities. For example, both the forex and stock markets are generally highly liquid, which can make it quite easy to enter and exit the market.

Also, trading or investing does not require leverage or borrowing. That said, there are ways to use leverage in the case of stocks and forex derivatives.

There are also some differences between stocks and forex. One of the things that sets stocks and forex apart is the trading hours. Forex is available 24 hours a day, Monday through Friday, except for weekend breaks, as it relies on global market information.

Stock trading generally depends on the opening of the respective stock exchange. For example, the London Stock Exchange (LSE) has trading hours from 12:00 to 12:02 and a break from 8:00 to 16:30, while the New York Stock Exchange (NYSE) operates from 9:30 to 16:30.

Another difference between the two is their size. The Forex market is the largest financial market in the world. While almost any two currencies can be traded against each other, the majority of forex trading worldwide actually involves major currency pairs. In total, more than $6 trillion in foreign currency is traded each day.

On the other hand, there are far more stocks available for trading, with over 2,000 companies listed on the NYSE alone. This theoretically means that stock traders have more options when it comes to stock trading compared to forex trading.

Also, stocks can be purchased separately, as individual performance is important. With Forex, currencies are always traded in pairs, buying one and selling the other. For example, in the EUR/USD pair, the Euro is traded against the US Dollar.

It should also be noted that most Forex trading is done by major banks on behalf of their clients, known as over-the-counter (OTC) trading, while stocks are traded on exchanges.



 

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