forex-vs-stocks

Trade forex or stocks!

Table of Contents.

Introduction to Forex.
Introduction to Stocks.
Similarities of both.
Comparison between Forex and Stocks.
Conclusion.

FOREX

What is Forex?

Forex is the short form of (Foreign Exchange) which is the global market for exchange of currencies.

What’s forex trading?

Forex trading is the trading of currencies in form of currency pairs. Forexamnple(EUR/USD)
Forex trading is both centralised and decentralised, i.e it’s driven by economic situations, political matters, market and psychological conditions.

Forex traders earn money by trading currency pairs (buying or selling) depending on market fluctuations, so as to make profits.

A short structure concerning forex.

Forex movements rely more on;

Economic Matters

GDP growths: This attracts investors which later boost the need for a currency pair.
Inflations of currencies: Low inflations strengthen the purchasing power of the currency hence, attracting more investors to buy that currency.
Interest Rates in Central Major Banks: If the rates rise, it attracts foreign investors which increases the demand for the currency hence, going for a long.
Employment Data of the country: Higher employment highlights a strong economy which attracts investors hence strengthening the currency.

Political Matters:

Elections surprise and excite the economy since the newly elected President/Head of State, is willing to boost the countries GDP which attracts foreign investments thus, causing higher volatility or short term volatility of certain currency pairs, forexample(The US-Trump_Election)

NB: High volatile market can be very risky, i.e gives a higher opportunity to both profits and losses.Always consider analyzing the market before starting to trade.

Strong and stable governments attract foreign investment, hence strengthening currencies.

Market and Psychological matters

Support and resistance levels that help traders to predict the next market’s move hence attracting more investors that raise the market capitalization which strengthens the currency pair.
Traders use bots and technical indicators to predict short term movements of the currency pair hence causing higher volatility in the market.
Trade balance of the country: Surplus balance of trade for a country increases the foreign demand for its local currency so as to pay for its exports, thus strengthening the currency pair.

STOCKS

WHAT ARE STOCKS!

Stocks are shares from public companies which offer investors a percentage equity in their company, according to the investment plan.

Stocks can earn you bigger profits in two major ways;

Investing in Stocks
Trading Stocks

Both of the two are investors because they trust their funds with the company so as both their funds and the company can optimize.

STOCKS TRADER

A Stocks trader is a person who buys or sells stocks/equities or securities for a short term so as to maximise their profits.

STOCKS INVESTOR

Stocks investors are individuals or companies who buy shares in another company and hold them for a longer term so as to get profits.

A short structure concerning Stocks.

For stocks, multiple economic conditions and performance of a specific company drive that specific stock.

Earnings

Profits or Losses in a company facilitate investors who buy more shares hence, boosting its growth. On the other hand, losses hinder investors’ willingness to invest in that company hence a company is in risk of bankruptcy.

On-board Leadership

Leaders with higher skills boost the companies’ growth hence, changing powerful leaders like CEOs at the moment makes the market very volatile.

Debt Increase

High debt in a company hinders investors’ love for buying shares in that specific stock fearing the risk for a company to run bankrupt.

Thefty of Companies’ funds

This losens trust for share holders and those willing to invest hence boosting its decline/losses.

And many more to be facilitated and taught to market tourists or beginners in trading!

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Similarities of both Forex and Stocks.

Both are financial markets( involve buying and selling so as to gain profits).
Both may require the same trading strategies e.g(Scalping, Day trading, etc.)
Both may require the same analysis tools (e.g Charts, indicators etc.).

Both can be traded through brokers.
Both can be influenced by economic factors.

The Most Appropriate to Trade of The Two!

Click! to access the comparison table.

	FOREX	STOCKS	Conclusion
Leverage	Higher Leverage(Favours those with smaller accounts).	Lower leverage hence, higher prices for shares.(Favours more those with bigger accounts).	Forex is better since it gives you higher chances to bigger profits, whether small account in referance to high leverage hence, a risk to losses too.
Analysis	-Technical analysis -Fundamental analysis -Sentiment Analysis(Market Psychology) Requires more, following economic data.	-Fundamental analysis -Technical analysis -Sentiment analysis Requires following more of companies’ news and reports.	Forex is simpler to analyze since it caters short term trading, that signifies more efficiency. While Stocks need longer term trading and more research so as the signals can figure out well.
Trading hours (Market hrs)	Open 24/5 (Open 24 hrs in 5-weekdays) Suitable for scalping and day trading.	(9:30a.m to 4p.m)ET 5-weekdays. Suitable for day trading and long term investing.	Forex gives you more time to generate profits daily from its longer trading hours with higher leverage. It also gives you much time for analysis.
Volatility and spreads	Moderate volatility in major currency pairs hence, its extreme during news events or announcements, e.g (NFP &CPI). Spreads are tighter.	Always high in individual Stocks like (AAPL) especially during earning reports.	Volatility and tighter spreads can be a key for traders to make higher profits in a short time with lower account inputs. Forex might be better since in certain time hours (trading hours) the market is very volatile.
Profit potential	Has high leverage hence, allowing small price movements to generate you higher profits more so, losses too.	Hence lower leverage, short term gains may require larger capital. Hence, risky since companies always have bankruptcy issues.	Forex guarantees you to generate bigger profits in a short time with little capital.

Both Forex and Stocks are profitable although, forex appears to be safer for those with little capital to generate higher profits.

Although Forex trading has appeared to be safer and more profitable for smaller accounts in a short time.

Success in trading depends on your strategy, discipline, ability to manage risks. So, being a pro, you must take the advantage and research about the trading strategies that can facilitate your financial growth.

You can begin by trading demo accounts by the best brokers that can secure your funds with tighter spreads.

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