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Forex Vs Stock Market – What Is The Better Choice
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Forex Vs Stock Market – What Is the Better Choice

Forex has gradually picked up with small investors who dream of making it big with small capital. In the race between Forex vs stock market, foreign exchange trading definitely has a decisive leading edge over the later.

Forex market is highly liquid with single day trading going well above four trillion dollars. The market operates 5.5 days in a week and transaction can be pulled off anytime within the 24 hours.

The market operates on a global platform and as such the trade occurring in different countries at different hours supplies it with liquidity round the clock. Stock market customarily remains operative five days a week between 9AM to 5PM with some nominal pre and aftermarket trading. The liquidity soars during normal trading hours and drops significantly after that.

Another major difference between Forex and stock market that opens the gates for making huge gains at high risk is leverage. The Initial margin deposit can be traded to 400:1 i.e. for a margin of thousand dollars; one can deal in currencies worth $400000. In stock trading, the leverage option can be used when the deposit exceeds minimum $2000 and is always accompanies by a high interest rate.

While trading foreign exchange, the retailer is not expected to pay any brokerage or commission unless they have exclusively invoked the services of ECN. Dealers rake in mullah through the bid ask spread whereas ECN earn commissions on trades executed. In stocks, one invariably needs to pay broker’s substantial commission. The minimum equity one needs to put on stake also varies significantly. Forex trading can be kicked off with a moderate sum of 250 dollars whereas trading in stocks demands that you must have equity of $2000 or above to secure the available margin.

Forex vs stock market also can be delineated in terms of the capability to carry out short selling. No restrictions whatsoever are imposed on former since the trader is simultaneously purchasing another currency. Stock market does put limitations on stop orders and short selling. In forex sector, one needs to analyze five major currencies only and study the impact of political turmoil and market psychology on them only. In contrary, stock dealers are expected to analyze thousands of stocks meticulously to remain in the game.

Each listed security has its own exchange floor. The confidence provoking situations cannot be relied upon as some companies may fail deplorably without any prior notice. This is not the case with forex market where currencies are not prone to such disastrous failures. The forex market is steadily emerging as a major source of consistent income for retailers across the world.

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