The financial market offers various opportunities to grow your money. Trading Forex or stocks is probably what you’re considering to get into right now. We would like to assume that you are already aware of the risks involved venturing in these two financial instruments. So today, let’s talk about how trading Forex and trading stocks differ from one another.
Volume
The Forex market easily beats the stock market in this department. Compared to the stock market’s $200 billion volume per day, the Forex market boasts a staggering $5 trillion volume per day.
A large trading volume is a big advantage for traders because it entitles them to get better order execution and pricing, as well as the ability to enter and exit the market easier.
Cost
One of the determining factors of investors today as to why they trade Forex instead of stocks is the cheaper starting capital requirement. Because trading in the stock market requires bigger capital, average investors and speculators see Forex as an easier entry to the financial market.
In Forex trading, there is what we call leverage, which is a certain portion of money borrowed from brokers. Leverage allows small time traders to boost their capital. But leverage, widely known as a double-edged sword, can either make or break you. Leverage can potentially enlarge your profits or losses by the same extent.
24/5
Because the Forex market is open 24 hours a day, thanks to advanced technology, this gives you the flexibility to trade at any time of the day. Whereas a stock exchange only operates an average of 7 hours a day.
Tradable Instruments
There are thousands of stocks you can choose from, while in Forex, you can choose from 8 major currency pairs. Although having more instruments opens up more trading opprtunities, you may also find it difficult to monitor many stocks at the same time. In Forex trading, you can keep an eye on a few currency pairs.
See also: Major Central Banks in the Forex Market
