Forex or Stock Trading: Which Is Right For You?

For the traditional purchase-and-hold, investors, "long-only" investors, make a clear choice for many reasons. There is a long record of positive returns in the stock; Investors can get regular income from dividends; Dividend and capital gains are favorable taxation, and so on. But when it comes to business, even if the barriers are still in favor of the stock, then there are many benefits for foreign currency trading. There are 10 factors on which decision should be taken to consider whether to do forex or stock trading.

Technical or fundamental analysis:

Forex trading is very much capable of technical analysis, which is considered by many stock traders as one factor in their investment, as they also need to examine the fundamentals of market and stock. If determining the internal value and using relative valuation is important for your business strategy, then you should stay with the stock. But if your strength involves charting and analyzing the technical patterns, then you can get better luck with the foreign currency business with the average Nutite.

Leverage

Foreign exchange is another issue when it comes to availing this benefit. Can you take advantage of the 50: 1 level available for Forex trading compared to just 2: 1 for trading stock? When your trades are working, you can increase the returns to get the maximum benefit. If you are uncertain about your ability to handle leverage, please do yourself a favor and avoid forex trading.

Discipline:

Do you have business discipline to cut your losses? For example, do you take a quick action when business conditions are running very badly? Are you able to walk away after a bad business day and do not try to get your loss back in an hour of frantic business?Due to the possibility of increased losses through leverage, trading discipline is necessary for foreign exchange trading. In stock trading, your losses are usually limited to the amount you invested. Even if you lose more than your initial investment, because you are moving in large amounts, the likelihood of such loss is not 50 times the probability of your original investment, in a future theoretically marginal Forex trading. possibleAfter the currency bounce on January 15, 2015, consider thousands of retail investors with heavy losses on their small Swiss franc posts.

Bearish bets:  

Forex trading makes it easy to take a recession condition. If you believe that the Japanese Yen has fallen short of the dollar, then you only have to sell the JPY vs USD in the foreign exchange market. Reducing individual shares is a bit more complex, although it is easy to keep a small position on the equity index through Inverse Exchange traded funds.

Number of positions A limited number of currencies in foreign currency trading, according to the International Surveillance 2013 Forex Survey, the top four most trading currencies (US Dollar, Euro, Japanese Yen and British Pound) are 5.3 million US dollars per day The average daily foreign currency is more than 75% of the trading business. Add to the other three major currencies - Australian Dollar, Swim Franc and Canadian dollar - and a forex trader only 10 major currency pairs.

Trading spreads: Due to the depth of the foreign exchange market, the expansion of Forex trading is more difficult than the stock; With abundant liquidity and tight spread, it becomes easy to get easy and easy to get out of foreign currency trading. , Where liquidity can be an obstacle and the bid-ask spread is widespread.

Trading Window: Is your primary trading window during the day or evening? For those who have a one-day business, business is not practical during regular business hours. So if you really want business, foreign exchange business is an attractive option as it is open for approximately 24 hours.

News Impact: Do you focus on the big picture and analyze comprehensive financial news or do you like digging into individual companies and areas? Currencies react more directly than individual economic consolidation news and economic data.

Risk tolerance: Your risk tolerance is a big idea when deciding to trade in forex or stock. Simply put in words: If you have less risk tolerance, then make clear the foreign exchange business. Trading is a part of risk in shares, but at least you can reduce the risk with the largest and most liquid blue-chips in that area.

Downside risk management: The management of downside risk in comparison to stock tradi

ng is often more important in Forex trading. You have to understand different types of orders which can be kept through the business system and also be able to apply hedging strategies.