Difference between Forex and Stock trading

People who are new to trading get confused between the forex market and the stock market; they even use these terms interchangeably. Forex stands for foreign exchange, and it is the trading of currencies in the international market.  This is a highly liquid market, incurring more than 5 trillion US dollars in a day. On the other hand, the stock market is a highly regulated industry with a low volume, bearing about 200 billion US dollars in a day. Stocks have been popular for a very long time and are considered to be a safer medium of trading while forex is relatively new and has gained momentum quickly in the past few decades.

Forex stands

The stock markets, all around the world are centrally regulated by authorities which gives them more of physical quality and make it safer for the investors both new and experienced. Popular exchange markets are the New York stock exchange in the West and the Bombay Stock exchange in the East. Any central authority does not regulate the forex market, all transactions are done in an over the counter manner, privately between the two parties involved in the deal, which makes the stock market a favourable choice for experienced investors.

Both these financial markets are user friendly, but forex attracts the new traders more because of its low brokerage rates and minimal cost of entry. Forex allows you to earn large amounts of profits in a short period of time, but the risk is also very high as compared to the stock market. Stock trading can only be done for a limited window of eight hours, commonly refers as 9 to 5 while the forex traders can indulge in deals 24/7. Since forex is not under the control of any central authority, the risk of being cheated and schemed is way higher than in the traditional stock market.

foreign exchange

The primary difference between foreign exchange and stock trading is that when currencies are traded, there is always one buyer and one seller engaged in exchanging currencies at the same time, there is no option of holding on to the investment. A stock market is a place where you buy a share in exchange for money when the market is down, and you hold on to that stock until the market rises and you sell it with a profit.

The forex market is famous because it provides a very high leverage point somewhere around 50:1 on an average. This is both an advantage and a disadvantage as this increases the chance of getting a profit, but it also escalates your risk of losing all of it. The stock market is a much calmer pool with the average leverage being 2:1, the only problem with that is, if you want to earn substantial profits, you will have to have huge capital.

Is Forex Trading Really Profitable And Can You Do It?

Is Forex Trading Really Profitable And Can You Do It?

Every aspiring Forex trader will end up in the skeptical phase of whether they need to carry on with it or not. The biggest question that baffles them is if the trade can bring them profits as much as they anticipate. This question often pops up in the mind of retail traders who are not able to succeed with their approach towards trading. The strategies they use are never considered to be in their approach towards the trade since they cannot have any application as long as the approach is a failure.

You must check through the different approaches when you start with your first trade and stick to the one that yields the best results. Only then will you be able to clear the way through the dark tunnel towards the light at the end. Yes, there surely is a bright light to forex trading, but to make money out of it isn’t as easy as it goes. Plenty of traders even today, make money out of the profitable category of forex trading. Forex charts and technical analyses can be used to update your trade and make a profit out of it. Making money out of the trade is different from keeping the profit, which makes it essential to understand the working of forex trade and its chances to make a profit. Let us dive deeper into the profitability of forex trade.

What Do You Need to Do as a Trader

What Do You Need to Do as a Trader?

When you step into forex trading, the first thing that you should check is the risk that each trade entails. By doing that, you are expected to become an efficient risk manager so that your trades remain unharmed. An intrinsic risk comes with every trade, which if taken to large extents, can affect you and end up in losses.

When applying your plan of trading, consistency plays a key role since it is the factor that adds to your profits, allowing you to reap benefits out of every trade. You could face a losing streak where the account of yours could fluctuate. If you use a positive expectancy strategy for your trade, you can make profits over the long run. Having a proper mindset to face all the losses is also important here because your account goes empty at times, and even at that point, you should be expecting more losses because that is how this works.

How Is Forex Money Managed and Profits Made More Probable?

Wins and losses follow a random pattern; so, you will need to expect all kinds of results from the trade. You must learn how to manage forex money; by trading a lot, you are putting yourself at risk. Don’t be disheartened by the day to day losses or be overexcited about wins as well, because your focus must be on the long-term profit.

Every trader who implements his/her plans consistently has better chances to reap more significant profits. Stop shifting from one approach to another since that will only teach you about the bad phase of every trade. Instead, go with a particular approach and find out where things went wrong to rectify it the next time. All these points make the statement clear that forex trading is profitable, but that certainly depends on your mindset and approach towards it.