Before we talk about the Forex business it is very important to know that Forex is a risky business and it should be approved by the government of your country. Few countries do not allow Forex due to the problem of money laundering. Otherwise, Forex is a good business as a part-time or full-time job opportunity.
Today we will look into some more detail about trading stocks and forex and there advantages and disadvantages. Then it will be easier to decide a decision for the investors. Stock market investing is for long term objectives, for example, say 5 to 10 years. But if your objective is short-term perhaps you are looking to supplement your income giving up your job and become a full-time trader. In that case, forex might be the preferred approach. There are several reasons.
First of all, if you trade in the stock market literary there are thousands of thousands of different stocks available to trade Globally. The stock market is made up of multiple stocks getting a Grasp any one individual could be quiet difficult because you have to go through lots of research, however if you inclined to do this research or if you got the know-how, you got the experience you can analyze company data, balance sheet, then of course stocks can be very profitable but there are a whole bunch of stocks out there you need to do a lot of research.
On the other hand if you look at the forex market it is generally made up of say 10 different currency pairs so you can actually spend less time in analyzing individual currency pairs than the vast array of stocks available out there, again it does depend on personal objective and the amount of time individual can allocate for this work.
If you are inclined to be a fundamental trader, trading stocks could be the preferred way to go because the fundamentals are a lot easier to understand than the forex market. Certainly, if you understand how to read a company balance sheet and so forth but If you want to be a technical trader then I think the forex market might be easier. The forex market is huge around 5 trillion dollars a day which is made up of retail and of course institutional players.
1. Cost / Trading Expenses
The cost of trading generally speaking is cheaper in the forex market might just pay small commission and in some cases, you won't pay any commission at all, you just pay the spread and in stocks, it is almost certain you are going to spend money on the spread as well as the decent size Commission. So If you have a small account you are going to waste all your money on commission so You should choose Forex.
2. Time Flexibility
Forex market is open 24 hours a day no matter what time zone you are in. But of course starting times of the day will be more liquid but you can trade different currencies in the different time-zone where it is liquid and you can adjust that with your lifestyle if you have other jobs to do in the daytime. On the other hand, the stock market is open from 8 am to 4 pm. So after that, you cannot trade.
Generally, the major Forex pairs have super large liquidity. Certainly the Euro against the US dollar which is the most actively traded currency pair out there. There is always a buyer and seller on the other end because it's not just the retail individual, there are many Corporations who buy to hedge risk against other Investments.
It is easier to get access to the forex market than access in the stocks market. First of all, you don't need a lot of money to start a business. Secondly, you have to go through lots of rigorous government standards, rules, and regulations. Thirdly if you have a computer and internet connection that means now you have access to a 5 trillion dollar market a day and it is trading 24 hours compared to the stock markets. Because one market is closed then another market is open. So you have much more power over your time. Which in the end matters.
5. Financial freedom
If you want financial freedom for you, want residual income or you are a student or doing other jobs besides this you can do Forex trading very easily and earn money but without knowledge of this industry, you should not come here because it would be gambling. Here we are not talking about gambling we are talking about professional.
6. Technical traders prefer forex market
Technical is more angle towards the forex market then towards stock markets because the forex market is the largest market which equals to 5 trillion dollars a day. It shows the key level of support and resistances which are more respected in the forex market because there are many more players than they are in the stock markets. Generally, the stock market is mostly occupied by the fundamental analyst. But it is a personal choice based on objectives and individuals characteristics.
7. Is Forex is a Zero-Sum Game?
Forex is a Zero-Sum game because if you are losing the money some other people are gaining it but stock trading is a positive some. Because when you buy share you are participating as an owner of the company.
8. Leverage is a two-edged sword
It can be good for you or it can be bad for you because you can amplify your gain or you can amplify your losses. Leverage in forex is larger than stocks so it has the potential to lose or gain a lot of money. The way people understand leverage usually tends to be as the thing that can make me a lot of money very quickly but if I don't use it wisely it can also lose my money.
Leverage also shortens the time frame of losing money or gaining money so it depends on the person how can use it by using his experience, knowledge, and strategy.
It also takes lots of effort, analytical ability, research and passion to do this business. If your analysis is not that good and you are losing your balance in forex business you can get help from the professional traders. You will also find thousands of free articles and videos on the internet. You can go through them. The bottom line is you have to be the master of Forex Trading. After that, you can consistently be in the profit at the end of the month.