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  • Tell us why you chose forex over the stock market

    Every forex trade made a choice to trade currencies instead of stocks. Tell us why you made the choice.
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  • #2
    started out as a stock trader but i didn't have enough $$$. After I found out about the amount of leverage in forex i switched over and haven't looked back since. Stocks have 4:1 leverage but even that has limitations

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    • #3
      Today investors have a broad spectrum to choose from: stocks, options, futures, real estate and foreign exchange, just to name a few. Itโ€™s important to take in to account investorsโ€™ unique circumstances, risk appetite and time horizon while choosing the best investments. Letโ€™s rationally compare Forex trading and Stock trading:

      1- TIME: Stocks show positive returns in the long run. Small moves in the foreign exchange can return huge gains or losses in very short time. Similar moves in the stock market have relatively smaller impact on the stocks.

      2- OPTIONS TO CHOOSE FROM: There is a huge variety of stocks in which one can invest. In Forex 5, 6 pairs of currencies are sold and bought frequently and the around 80% volume of market is comprised of these currency pairs. Investment decision making is easy in Forex market as compared to stocks.

      3- VOLUME: Foreign exchange market volume is more than $5 trillion daily which is huge as compared to volume of trade in stocks.

      4- DIVIDENDS: Investors get dividend even when they are not participating in the market.

      5- BUY/SELL SPREADS: Spreads in the Forex is small making it easy for investors to enter and exit the market easily. Bid ask spreads in the stock market are wide.

      6- LIQUIDITY: Forex trading gives more liquidity than stock market. Level of liquidity varies for every stock.

      7- IMPACTING FACTORS: Macroeconomic conditions and economic factors impact foreign currencies more than they impact individual stocks. Blue chips stocks are known to able to operate profitably even in worst economic conditions.

      8- RISK TOLERANCE: Foreign trading is appropriate for investors with low risk tolerance. Different stocks have different level of risk that can be mitigated by investing in a portfolio.

      9- TRADING HOURS: In Forex, 24 hours trading is available. The stock trading stops after dealing hours.

      10- FEES AND COMMISSIONS: Stocks brokers charge fees and commissions for their services. Currency brokers charge little or no commission for their services. Their services are compensated in the bid/offer spread.

      11- LEVERAGE: Leverage offered to investors in foreign exchange markets is very high as compared to stocks. Stocks have a leverage of 2:1 while the forex offers leverage up to 50:1

      12- AVAILABILITY OF INFORMATION: The information on foreign exchange is easily accessible as compared to stocks. For stock traders it is important to evaluate financial statements, financial health and potential growth of the company he wants to invest in.

      13- ORDER EXECUTION TIME: Order execution is fast in foreign exchange. In stocks the order execution is delayed.

      FOREX: Forex is an over the counter market which does not need a traditional exchange to trade. Forex is the biggest fiscal market and the trading volume is very high in foreign currencies. The volatility in the currency market is rising with the increase in debt issues in Europe and the U.S. and with slowing growth in the economy. Investors with a very strong perspective on foreign exchange can benefit from small market movements in very short time. But if their perspective goes wrong, the losses are also huge. To avoid this it is recommended to limit the investments in foreign exchange to a small portion of your total investment portfolio. Use the appropriate market strategies and intensely focus on macro and micro-economic factors that can impact the foreign exchange trading. Donโ€™t hesitate to seek professional help and hire a financial advisor to avoid making mistakes.

      STOCKS:Dividend payments are no doubt a very attractive feature for investors to vote Stocks on Forex. In the long run, investors get dividends and capital gains every year without engaging yourself into a transaction. Level of risk is different for different stocks that provide investors a variety to choose from according to their level of risk tolerance. Stocks are good investments not only for buy and hold investors but also for active traders. Long term Investors are not attracted towards the level of liquidity investments have and they are happy with less liquid and moderately risky investments like stocks.

      For investors with lower tolerance for risk, Forex is better. For investors who are looking to invest for longer time horizon, stocks are better that also give dividend. If an investor is seeking stable returns on his investments and wants to advantage from different level of risk, stocks portfolio can certainly do so for him. When UK voted for Brexit the European currencies were intensely impacted, GBP declined against major currencies of the world and lost its value. GBP further declined when David Cameron resigned. The impact of economic and political issues is very intense on currencies and the investors suffer huge losses with such unexpected issues. After Brexit the stock market was also impacted but the Blue Chips managed to survive and continued to be as profitable as they were pre-Brexit. It is hard to decide if stocks are better than forex but when it comes to unexpected changes in the macroeconomic conditions of a country, stocks are better.

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      • #4
        Oh and also the hours for forex are better. I hate that equities markets are only open 5 days a week and for 8 hours or so

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        • #5
          You can make a lot money from Forex market. But you have to follow some basic rules. If you want to make money in a quick time, Forex market will not for you. In forex market, the main thing that a trader need to have is patience. The more you wait, the more it is possible to make money. Quick trade can put you in loss. This is a long term investment. I am trading with Tpglobalfx from last 2 years. with the help of them I learned that there is no scope to be quick. patience is the main key factor to make profit from the forex market.

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