Choosing Between Forex and Stocks

There are several different factors that you need to take into consideration when thinking about investing in either forex or stocks.

One of these is the degree of leverage. In the forex market, there are high trading volumes, and you will get more leverage with spread betting and contract for difference (CFD) than you would with a stock market trade.

The freedom of choice offered by both forex, and stocks, trading is different too. When you are in the stock market, thousands of different shares are available for you to buy and sell, in exchanges all over the world. This is quite staggering, but even if you limit yourself to stocks from a particular industry or type, then you still have a great deal of choice.

Forex, however, is a relatively small list of significant currency pairs, or a list of minor pairs; slightly longer, but still nowhere near the list of stocks that are available. There is always plenty of choice for traders, and the shorter list helps them to focus on what they want to achieve. Most forex traders will keep their trading to about five of the major pairs of currencies.

Why Forex?

Some traders prefer the forex market, because of the size of it. It is estimated that around $4 trillion is traded each day, and traders do not have the same impact on a currency as they might do on stocks. For example, if a significant investor buys or sells a considerable amount of capital in a business, it can have an impact on that company’s value. This does not happen with forex.

Doing a little bit of research is essential when deciding which type of trading you want to do. This is very easy now, as there is so much information available online, and trading providers also offer a great deal of advice that will help you to get started.