The two most interesting investment for many investors is forex and stock trading. Many investors choose forex due to forex leverage. For the details, we give you a comprehensive comparison between the forex and stock trading, below.
Leverage
In stock trading, you will face some limitations. One, you can trade normally with a maximum of 2:1 leverage. Two, you need to fulfill some requirements for that. Three, you also need the approval to open approval for a margin account.
On the contrary, in Forex trading, you only need to open an account to trade with leverage. There are no other requirements. In the United States you are limited to 50:1, meanwhile, in other countries, you can leverage up to 200:1.
Liquidity
Market price changes based on supply and demand. The price of your stocks can go anywhere from a few dollars to hundreds of dollars.
Conversely, trading on the forex is different. Even with the fluctuational country’s currency, there is always a large amount of currency available to trade. That means all major world currency is highly liquid.
Paired trades
In Forex, currencies are always quoted in pairs. Thus, you have to concern about the economic health of both countries you are trading and trading against. That includes the countries’ job growth, GDP, and political prospect.
Meanwhile, in stock trading, your primary concern is only in the market you trade. For instance, when you buy shares of Intel, you only need to concern whether the stock will increase in value. You do not need to focus on the prices of stocks from another company.
Also read: Forex Bonus Review: XM $30 Trading Bonus
Price Sensitivity
The two markets have very different price sensitivity to trade activity. If you purchase 10,000 shares, you may affect the stock price. Specifically, for smaller corporations with fewer shares outstanding than giants.
In contrast, in forex trading, your purchase will have little to no impact on the currency’s market price. So, even when you purchase several hundred million dollars in a major currency, you will not affect anything.
