When talking about investment and asset development, there are two topics that almost always emerge. First, asset development through investing in securities companies and forex trading to collect profits. Although both are in the financial sector, the two types of investment have quite large differences.
According to Investopedia, investors generally seek larger returns over an extended period through buying and holding. In contrast, traders take advantage of both rising and falling markets to enter and exit positions over a shorter timeframe, taking smaller, more frequent profits.
Check out the differences between investing in securities companies and forex trading that you need to know about.
Market Access
In one day, the capital market where the securities are traded opens for an average of 7 hours. After the market closes, no transaction takes place. This might make traders able to rest. However, if there is a change or certain news, sudden price changes can occur immediately in the trading session the next day.
Meanwhile, the forex market is open 24 hours for 5 days. Although this requires more vigilance from traders/investors, you have the opportunity to prepare yourself when changes and issues that affect currency prices arise.
Comparison of Risk and Profit Transactions
Generally, buying and selling securities have a delay. This allows changes that can affect the buying and selling price during this period. Unlike forex, almost all transactions that occur are carried out and executed in real-time, almost without delay.
The forex market also records transaction volumes that are far greater than the biggest exchanges.
Leverage
Forex traders have the advantage of a leverage system that you can use to maximize your profit potential. For example, a leverage ratio of 100: 1 allows you to control trades and profits from transactions up to USD 100,000 using only capital of USD 1,000
Based on the three main differences above, you can see that each type of investment has advantages and disadvantages of each. To determine the best investment choice, you need to recognize your readiness and your risk profile.