Forex Vs. Stocks: What Is A Better Investment Option?
When it comes to investing, many people have a lot of questions. The most common one is probably where to invest their resources in. Forex is one option that seems good to many, but one would obviously have their reservations. On the other hand, good old stocks are always an option.
If you’re stuck between Forex and stock for investing in, keep on reading. There are several factors which should affect this decision. We’ll be looking at some of them below:
1. Location And Accessibility
Once upon a time in the investment world, location was of prime importance. Of course, the Internet has made physical presence much less of a necessity than before.
Stocks could at first only be traded in some specific centers in major cities like London or Tokyo. This necessitated an investor being on the spot or sending someone in his stead.
Forex trading never had any such limitations. Sticks may have had a history and may still be bound by location, but it’s not too hard and fast now. In the matter of location and accessibility, then, Forex and stocks are tied.
Financial trading is now done almost solely by electronic means. Anyone with an Internet connection and a smart device could probably be investing and trading in both stock and Forex options. They could hence invest as easily as deal with a service for dissertation writing UK.
2. The Amount Of Leeway
There are both stock and Forex accounts available today. Each option has a certain minimum deposit. The difference occurs when one looks at the offerings.
For stock accounts, the maximum leverage is 1:2. This is quite low as compared to Forex account, which could give 1:5 at the minimum. What does this mean? Basically, if an investor puts in a thousand dollars on the stock market, they could double it at the most. On the Forex market, however, the earned amount could be fifty thousand and above.
While this may sound amazing, one should take care to note that high leverage isn’t always a good thing. If beginner investors make an unlucky decision, they could stand to lose much more than they have. Hence, one needs quite a bit of care and experience when trading in Forex.
Still, there is the fact that Forex brokers have lower commission than traditional stock brokers. Plus, Forex offers more flexibility when it comes to investments and their returns.
The stock exchange has its own timings, and stock markets are bound to them. Hence, the markets for stocks are only open for eight hours a day, five days a week. So even though stocks are available online, purchasing and selling is quite limited and doesn’t hold well with all kinds of schedules.
On the other hand, Forex markets are open all day for five days a week. It hence takes into account the difference of time zones and the global market. It makes a lot more sense to trade this way in the modern world.
4. Options On Offer
The stock exchange may have its limitations, but it’s much easier for a beginner investor to get started there. This is not just because of the relatively safer returns, but also the fact that the stock market has a wide range of trading instruments. In fact, just about every open organization in existence would be on the stock exchange.
When it comes to Forex, the variety is not very wide. It mostly trades in the major organizations. However, since the US dollar is the main basis of transactions here, this does make the Forex market easier to follow.
Hopefully, an investor could better understand his investment options after reading the above points. Both Forex and stocks have their pros and cons. At the end of the day, an individual investor would have to look at their own situation and decide which option is best for them.