Compare Forex Trading vs Stock Trading

The largest and most liquid financial market is foreign currency exchange click this. As with stock exchanges, the forex market is not operated by a central clearing house. Orders can be placed at the counter. Retail traders and investors are less interested in forex trading than they used to be. Previously, it was available only to Hedge Funds. Only recently have retail forex traders been permitted to participate. For retail investors, stock trading dates back much further. The recent advancements in computer and trading technologies have allowed retail traders to easily trade forex or stocks from any part of the globe. The ease of accessibility and the low costs have made it easier for retail investors in stock and currency trading to be successful. What’s the best option to choose for a trader? Compare retail stock and retail forex trading.

The Instrument
Stocks and forex trading involves the purchase or sale of different items. Stock trading occurs when a trader buys or sells equity in a company in a specific country. Around the world, there are many different stock markets. A number of factors impact the price movement. For more information on the factors that affect stock prices, please refer to my article under stocks. Forex trading involves the buying or selling of currency pair. A trader will buy a country‚Äôs currency before selling it. From this, the exchange term was derived. The trader is expecting that the value for the purchasing currency will be greater than the selling currency. Forex traders basically bet against the other country’s monetary policies or economic forecasts.

Trading hours & their disadvantage to retail stock brokers
Forex is available 24 hours, while US stocks are only open between 930am ET – 4pm ET. Forex traders can choose the time they want to trade while stock traders are limited to 930am EST-4pm ET. Market makers are prohibited from trading during retail hours. Stock traders have a major disadvantage. These pre and post markets are also hours when many companies release their results. This has a major impact on stock prices. Retailers can monitor prices only during pre-market or post-market hours. A stop-order is not honored during these times. This disadvantage does not affect forex traders. Forex trading is also possible for stock traders.

Interest Rates & Currency Trends
Macro-trends and national finance policy influence the major currencies. They tend not to change much for a very long time. Stock prices are affected a number of micro and stock-specific variables. The forex markets is better suited for stock trading.

Forex Trading is my preferred option over Stock Trading for the reasons I have mentioned. This is especially true in this uncertain global economic environment. Stock trading could be an alternative to the stock markets during bull market conditions. Stock traders must seriously consider adding Forex trading to their portfolio. Stock traders are able to take advantage of forex trading during non-business times and trade at their convenience. Trading forex will help stock traders to better understand all world economies and improve their trading abilities.

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