Forex Trading Verses Stock Trading

Forex trading has become a popular investment opportunity around the world. There are numerous reasons as to why most people have turned into forex trading. One of the major reasons has been the advancement in technology specifically the internet. The internet has made it possible for anyone to engage in forex trading at any time in any part of the world. Besides, it has also become a major source of investment as well as employment for people across the world.

There are hundreds if not thousands of forex brokerage companies such as DeltaFxMarket and InvestMIB who help investors to trade on various platforms. It is very difficult to engage in forex trading without the help of a forex broker. The most important thing is to always ensure that you choose the right forex broker.

On the other hand, stock trading is an old practice almost similar to forex trading except that forex trading involves buying and selling of shares from different companies. Most people tend to prefer forex trading because of a number of reasons such as the ability to enroll and opt out any time, small startup capital among others.

Similarities and differences between Forex and Stock trading

Market size and liquidity

There is no doubt that the forex market is the largest in the world. It is estimated that more than US$4 trillion is transacted daily across the world hence dwarfing the stock market by far. The other comparison is that the forex market only deals with a few pairs of currencies, unlike the stock market which has thousands of different stocks trading daily. The other thing is that the forex market appears to be more volatile than the stock market. Prices of different currencies can change in a matter of minutes.

Initial capital

Trading in the stock market demands that an investor has a substantial amount of money in order to purchase different stocks to increase the chances of making a profit. This is contrary to the forex market where an investor can start trading with a few hundred dollars and still manage to make profits. Besides, a stock trader will often have to wait long before he or she starts to make a profit unlike in forex trading where investors can start earning profits instantly. However, it is also important to note that the risk of losing money is much higher in forex trading compared to stock trading.

Trading items

The types of items being traded in the forex market are quite different from those in the stock market. The stock market basically involves traders buying and selling shares. On the other hand, forex trading basically involves the buying and selling of currency pairs. Investors can purchase currencies from one country and sell them to a different country with the aim of making a profit.

Why Forex Trading attracts more people

As mentioned earlier, it is easy to get started with forex trading compared to stock trading. Most forex brokers such as DeltaFxMarketsand InvestMIB require a trader to deposit a minimum of $100 dollars in order to start trading. Besides, a trader can always start by opening a demo account to familiarize with the market before starting to trade officially.

In a nutshell, forex trading has got more advantages compared to stock trading. The fact that it can be conducted by anyone through the internet makes it more convenient for those who have full time jobs but would still want to engage in forex trading to make extra income. More so, it is easy to learn how the forex trading than stock trading. That is probably why forex trading has is more popular today as a form of investment.