If you are reading this article then that means you have applied and successfully passed through the basics section regarding Forex trading and the art of mastering it. But you are here because you are confused about whether Forex trading is the better bet or the stock market.
Therefore, I bring to you; the debate of today, whether stocks are for the win, or Forex trading till the end of time?
Stocks are for the ones with a rather traditional preference who tend to stay in the game for the long run. They tend to be their first choice for reasons like: stocks include long-term record of positive returns, the investor can receive a regular income from dividends, dividends and capital gains have favorable taxation, and the list goes on.
Although, when you are a part of the Forex trading community you will think of reconsidering your decision due to the stocks outweighing the Forex advantages. But that does not mean that the Forex trading department does not have any advantages worth looking at.
Here we have listed a few factors to be considered when making the final decision on forex trading or stocks.
This is a tricky section for some since trading discipline is essential to Forex trading as there is major potential for losses to be magnified through leverage. When it comes to stock trading, how much you are investing is what your loss depends on. . If you don’t know when to walk out after the bad trading day then Forex trading isn’t for you as its going to make you loss lot more than you have invested.
Whereas, in stock trading the amount of loss you can possibly face is restricted to the amount you invested initially, and even if you do lose more than that investment, it is highly unlikely for it to be 50 times the original investment.
Leverage is the Challenge
The point of keeping leverage when it comes to Forex is that it can magnify your returns at a massive level. But as we already know, an excess of anything could also cause more damage than benefit for you. Excessive leverage could also wipe out your trading capital in minutes!
Therefore, if you feel you don’t have what it takes to handle the leverage drama, then you might want to sit out of the Forex trading and opt Stock trading.
Take Your Pick: Fundamental or Technical?
If you think the technical side is your best suit then Forex might be much easier for you to manage, along with the charting and analyzing technical patterns as your strength you will be shoe in! As for stock traders, you will only need to examine market and stock fundamentals.
Do Not Skip the Risky Bets
You must be able to know when to make the safest bet, but also how far can you take the risky ones as well. While you are in as the Forex trader your bets are mostly on the currency and it is surely all about the timings. Like, if one of the currencies seems like it might be going lower, that’s when you make your move. For example if Euro is going down against the dollar then might want to sell your Euro currency and buy Dollar to minimize loss and maximize profits.
Can You Keep Up?
Seems tricky doesn’t it? But this is one of the most important questions you need to ask yourself before you are aboard on any ship that is sailing.
The reason this is a question that needs to be asked on time is because in this particular field you need to be vigilant. You need to concentrate on the news on trends, rates, new platforms, updates etc. And more importantly you need to know about each currency for your own good. This way you can save up on last minute.
It is obvious you must have a primary trading window; a specific time of day that you find easy for you to trade, be it in the morning or evening. Depending on what your job timings are, or what time seems rather more feasible for you is your trading window. For instance if your job timings are a little relaxed then you may be able to adjust Forex trading in your schedule since that allows 24 hour exchange. Whereas you might face a few difficulties with stock market exchange if you have a job that has timings according to normal office hours as that is the only time you can trade within the stock market.
Therefore, when choosing between Forex or Stock market, you must know about your availability to be able to manage the execution properly.
It is absolutely essential or you to be aware of how much risk could you possibly tolerate till you feel it is time to say goodbye. Be it stock trading or Forex, your level of risk tolerance is always in consideration.
This is easy to understand if you put it this way: low risk tolerance = no Forex trading. And even though trading stocks also comes with its own baggage, it is still manageable since all you have to do is simply glue yourself to the biggest and most liquid section and you’re all good to go!
The Final Say
At the end of the day, you and only you are capable of judging what suits you best and it what way. You must determine which side you can play for, it could be Forex trading and it could be stock trading. All you need to do is put your skills to the test, and whatever wins, may the odds be ever so in your favor!