Friday, October 9, 2015

Difference Between Forex and Stocks




What is the difference between Forex and the stock market? The forex and stock markets are closely related, but they differ by the principle of operations performed on them. You trade currencies on Forex and shares and bonds on the equity market. The largest exchanges are situated in New York, London, and Tokyo. The stock market mainly differs from Forex by sums needed for trading. To buy shares, you need quite a significant capital of about 10-100 thousand US dollars or even more. But trading is much quieter than one on the forex market where you win or lose large sums over a short period of time. The stock market can be divided into primary and secondary. The primary market is used for initial public offerings. These shares are usually purchased by individual or institutional (investment funds, insurance organizations etc.) investors. The secondary stock market consists of the over-the-counter (OTC) market and stock exchanges. Here, issued securities are resold to other investors. Main participants of this market are speculators who buy securities at a low price and then sell them at a higher price. Pros and cons of the stock market and Forex Here are the main advantages of trading on the stock market: - trading securities, options, and futures; - predictability of shares’ dynamic. While currency pairs are influenced by many factors (inflation, interest rates, unemployment rate in developed countries etc.), shares are way more predictable. Still, some significant events, announcements, and statistics bear on them and can lead to sharp movements (a sudden rise or tumble). Among disadvantages are: - shares’ devaluation in case of financial and economic crisis; - slippages. Order execution at a price which differs from a quoted one may be due to constant gaps after weekends; - significant start-up capital; - low liquidity of trading portfolio. Sometimes it takes quite a long period of time to sell your item; - high volatility (price fluctuations). Benefits of trading on Forex are: - stability. Forex is protected from a fall in stock indices and a possible  financial collapse thanks to the peculiarity of a currency that is the only thing traded on the market; - liquidity. There will be no problems with selling a currency in a full volume and at needed price as there is a myriad of buyers on Forex; - round-the-clock access. You can make a deal anytime and in any spot with the internet connection; - low volatility. Daily price fluctuations of currencies equal no more than 1%; - low initial capital. You can start trading on Forex with only $1; - leverage. To make deals on the currency market, you simply need to deposit a margin; - opportunity to open a demo account. Some drawbacks of Forex are: - low trading discipline. Losses are not controlled by anyone but you; - losses due to wrongly chosen deal sizes. In conclusion Of course, only a trader decides what market to choose. Make your choice according to your own views and priorities. Keep abreast of market tendencies and take into account possible risks. InstaForex wishes you successful trading!

0 التعليقات

Post a Comment

بسم الله الرحمان الرحيم

(أَمْ يَحْسُدُونَ النَّاسَ عَلَى مَا آتَاهُمُ اللّهُ مِن فَضْلِهِ فَقَدْ آتَيْنَا آلَ إِبْرَاهِيمَ الْكِتَابَ وَالْحِكْمَةَ وَآتَيْنَاهُم مُّلْكاً عَظِيماً)
(وَدَّ كَثِيرٌ مِّنْ أَهْلِ الْكِتَابِ لَوْ يَرُدُّونَكُم مِّن بَعْدِ إِيمَانِكُمْ كُفَّاراً حَسَداً مِّنْ عِندِ أَنفُسِهِم مِّن بَعْدِ مَا تَبَيَّنَ لَهُمُ الْحَقُّ فَاعْفُواْ وَاصْفَحُواْ حَتَّى يَأْتِيَ اللّهُ بِأَمْرِهِ إِنَّ اللّهَ عَلَى كُلِّ شَيْءٍ قَدِيرٌ)