A beginner trader is deciding what to do with his money. Should I trade Forex or Stocks? Let’s find out!
For starters, rule out the obvious:
Like you, money has to work every day. Money cannot stand still in the bank waiting to lose its value because of inflation in the next economic crisis. The most important thing of all is that the money works for you! It’s your money after all. What do you think the bank does with the money you leave on deposit?
The answer is very simple: the banks trade the money and invest it.
If you want your money to work for you, you have a long and exciting road to travel to become a financial trader, the first step will be to choose the type of market to trade or invest.
In this article you are about to witness an epic confrontation between two of the most important financial markets in the world today: Forex vs Stocks!
So without further ado, ladies and gentlemen, please welcome him to the stock market!
By definition, a share is a financial asset or security that proves ownership in a company. The owner of the share may claim an interest in the assets and profits of a particular company. Simply put, a shareholder is a co-owner of a company with hundreds of other people with whom he or she shares the profits and losses. The ownership interest is proportional to the number of shares a person owns compared to the total number of shares outstanding.
On the stock market, the shares of several open-ended companies are traded.
Since humanity went from basing its economy on raw materials to industrial goods, the stock market has become the undisputed champion of the financial markets. However, towards the end of the 20th century, the course of digital progress created the perfect conditions for the emergence of a great rival, the Forex.
Forex is short for Foreign Exchange and refers to the market in which currencies of different countries are exchanged.
In case you don’t know, a currency is a form of money generally accepted and issued by a government that is in circulation inside and outside the economy of a given country. Money, or specifically foreign exchange, serves as a means of exchanging goods and services and is therefore a necessary tool to facilitate trading in all its forms, including those carried out in the stock market. As you may have guessed, a stock is exchanged for currency.
Let the battle between Forex and stocks begin!
Round # 1 Accessibility
First, location plays an important role in comparing the stock market to the Forex market. Historically it was only possible to trade stocks on specific locations, such as the New York, London or Tokyo stock exchanges. Only a relatively small group of authorised entities, some private traders and certain brokers could trade shares. Trading could only be carried out by being physically present at the place where the shares were exchanged or by means of a proxy agent. As you can imagine, this imposed certain limitations on the number of people who could be involved in trading. The operating yard didn’t have room for that many people.
On the other hand, Forex trading, in contrast to the stock market, has never been limited to a specific location, which has contributed among other things to its accessibility.
Currently, most financial trading, including stocks, is conducted online and anyone with Internet access can open an account with a broker, download the software to read the charts and trade from home.
The opponents exchanged fists and it seems that the first round ended in a draw.