Being part of a company and a growing economy without much commitment is quite simple: own a stock. Amazingly there are 2800+ listed New York stock exchanges. 1.6 billion shares traded each day. This means you have a wide range of stores to choose from blue chips stocks to high-growing companies. Hence, when it comes to stock trading, your options are limitless. And with stock trading software, you can easily earn money trading from the comfort of your home without necessarily going to wall street.
Now with forex, dozens of currency pairs are traded, with only a handful traded actively in the forex market. Hence, there is a limit to trades in forex. After all, you can only trade with the currencies on the ground, right?
So, why won’t anyone want to consider stocks? You can choose any successful company, take advantage of a growing economy, build wealth over time and protect them against inflation and taxes.
This is just one of the many reasons why you should consider stock trading instead of forex. Need I say more? Here are the top reasons why stock trading can be of benefit to investors.
Before diving in, what is the significant difference between forex and stock trading?
Of course, the main difference is the instrument you are trading in. In stock trading, a trader buys or sells shares traded on a stock exchange or over-the-counter. A claim is a unit of ownership of a company, and owning shares gives you rights to part of the company’s earnings.
Foreign exchange is called forex, and it is the buying and selling of different currencies. Forex traders take advantage of the differences in the value of coins by exchanging one money for another.
Here are other benefits stock trading has over forex
Yes, leverage can be a powerful tool to gain access to trade prominent positions in currency with less capital, and this is one thing forex raiders boast of. However, we can’t ignore the abuse of leverage that is becoming inherent among traders.
Unexperienced traders especially misuse the leverage proved by brokers to either enter many trades or enter too many size lots. We have heard how traders quickly pack out bucks by leveraging only to lose it all after a week. The misuse of leverage is considered as the reason for these losses. Hence, it is regarded as high risk as it magnifies the potential profits or losses that trade can yield.
Stock trading, however, can earn a lot of profit even without leveraging, which means fewer risks and higher chances of gains. Therefore, stock trading can be considered a more profitable investment than forex.
It’s given, stocks are highly volatile than forex. And when we talk about volatility, we refer to how likely it is for an asset price to fluctuate at a particular point in time. A market with high volatility will experience rapid changes in prices. While for those with low volatility, price tends to remain steady or grow at a languid pace.
This means that as the volatility increases, the potential to make more money also increases. And for this, the stock market is your sure bet. The most volatile stocks may show price fluctuations up to several hundred percent during the day. This explains the reasons why many investors end up with better payouts than currencies.
Therefore, with just a basic understanding of maths like addition and subtraction, you can get started and get better with time, resources, and the right tools.
Ease of trading
Unlike forex, stock trading is straightforward, and you can find opportunities with just a few stocks. You don’t need to be a maths wizard or a genius in investment before you can get started. The good thing is various brokerages are offering some trading on the popular NYSE. Hence, you can pick from countless options regarding brokers and the platform you wish to trade.
The is one of the main problems plaguing the forex market. How can you regulate a market that is trading 24/7/365 days all over the world? There is no centralized body governing the trading market. And there are so many barkers out there that it’s difficult to discern the bag eggs from the good ones.
More reasons why it is not ideal, especially for inexperienced traders who do not want to fall prey. The market is completely swamped, and it has attracted scammers and dishonest investors. On the other hand, stock trading is centralized and regulated by the Securities and Exchange Commission (SEC). This helps promote transparency and safety in trading.
Stock trading or forex, which should you go for? Well, these reasons are enough to help you make intelligent decisions.