When it comes to determining whether you should trade stocks or forex there are few factors you need to consider in order to make the best choice. Despite being interconnected, the two most popular global markets are vastly different. The largest difference being of course, what you are trading. While the stock market deals in shares, the forex exchange is a marketplace for buying and selling currencies.
Read on to find out which market suits your trading strategy and risk appetite the best!
The foreign exchange market is the world’s largest financial market, accounting for more than $6.6 trillion in average traded value each day. In comparison, the dollar volume of all the world’s stock markets combined averages roughly $200 billion per day. Having such a large trading volume can bring many advantages as it offers traders significant liquidity which can provide lower transactional costs as well as protect traders from price manipulation.
One major benefit of trading forex is that the currency markets operate 24 hours a day, five days a week, providing ample opportunity for trading. Trading a listed stock is limited, for the most part as Stock traders are at the mercy of the hours of the stock exchange. However, several major exchanges are increasingly offering extended hours for traders to enable them to participate during pre-market, and after-market trading periods. This allows them to act quickly on breaking news, even when the market is closed.
Forex traders have the ability to seek out long or short positions with ease, providing the potential to profit in both rising and declining markets. Stocks however can frequently hit a lull, which can negatively impact volumes and activity, as such traders are unable to open or close positions whenever they would like to. Additionally, it is very rare for a trader to profit from a declining stock market.
When it comes to determining whether you should opt for forex trading over stock trading, it is best to determine which market best suits your trading style and financial goals. Start your trading journey today with CedarFX, the world’s first eco-friendly broker. Enjoy no cost transactions, narrow spreads and up to 1:500 leverage on all 55 currency pairs ranging from EUR/USD to GBP/NZD.