Why is FOREX not so different from stock trading
With the advance of technology and the availability of information accessible via the web, more and more people are interested in investing in the stock market and the foreign exchange market, or Forex; this is due to the possibility of earning large amounts of money.
Today, there is a great deal of useful and instructive information, which offers the opportunity to train as a specialized trader and have a solid foundation in knowledge of the economy.
A stock exchange is a private organization that provides the necessary facilities for its members, according to the mandates of their clients, to enter orders and carry out negotiations for the sale of securities such as shares of companies and the channeling of capital in the medium and long term from investors to users.
The stock market is one of the most traditional ways to make a profit on an investment.
It can be difficult to develop a business system that can offer you a monthly benefit of 10-15%.
The stock market of each country, and it only deals with business and foreign exchange within that region. Hours of operation are generally during office hours, and holidays and weekends are closed.
The Forex market is the place where currencies are traded. It is the world’s largest and most liquid market with an average daily trading value of $3 trillion and includes all currencies in the world.
Compare that with the $25 million a day trading on the New York Stock Exchange; you can easily see how the huge foreign exchange market is the biggest.
What exactly is traded on the Forex market?
It is the simultaneous purchase of one currency and the sale of another. Currencies are traded through an intermediary and are always traded in pairs, EUR/USD or GBP/JPY.
Suppose you buy the pound sterling, what you buy is a share in the British economy.
Unlike the traditional stock exchange, the foreign exchange market is open 24 hours a day. Anyone, anytime, anywhere in the world, a financial center is open for exchanges of currencies from different countries.
You can operate at any time you like in the afternoon, evening, or early morning. This is undoubtedly a great advantage.
Note that the time when the market moves fastest is when the European session is open.
But, How Are Both Markets Similar?
Investing in the stock market or in Forex depends on the needs of each user and whether they have a short or long term vision, among many other factors that are taken into account when we put our money at risk.
Both markets are economic spaces; that can mean that they have the same similarity in the sense that both are the same, but the market in which the benefits of investment are sought is really different and the ways of operating in them are different.
But today, Forex is considered the closest and least “bureaucratic” option for beginners in the investment world.
To invest in the stock market you must have knowledge of world markets, stocks, bonds, and related markets. And it is advisable to have the advice of a professional who will instruct you with the tools to make purchases and sales that generate favorable profits.
In Forex, one must be aware of the values of the currencies and the situations surrounding them, i.e. politics, economics and other factors that can affect the economy a coin reflects, in order to be able to invest in those that give you the greatest profit.
If you want to succeed in both Forex and stock markets, it is essential that you have the following factors: experience and emotional control.
If you have those factors and start trading in any of these two markets, you will notice some similarities between them.
The fundamental analysis is something that moves both markets, only in one you have to study the companies while in the other you study the economic movements worldwide.
Another fundamental aspect to consider in both markets is the technical analysis and the practice regime in order to improve day by day the buying and selling strategies.
Where Does This Difference Break?
It should also be borne in mind that the commissions for trading on the stock exchange are high, which means that it is more expensive to carry out small transactions. The foreign exchange market, on the other hand, has lower costs, both in terms of transaction costs and commissions.
Generally speaking, one can say that on the Stock Exchange, one invests in shares of companies, a small part of a company, while on the Forex market, one trades currency pairs.
Depending on your interests (and speaking on a large scale), in general, a long-term investment is more advisable for the stock market, while, in the future, Forex is the option.