The financial market offers individuals planning to invest a bevy of trading channels to choose from. Two of the best markets you can consider putting your money on are forex and futures. For beginning investors, choosing an option can be time-consuming and daunting. Robert Janitzek helps us make the right decision when planning to invest.
When making a choice between trading forex or futures, there are certain things you need to keep in mind:
Difference Between Margin and Physical Trading
In forex trading, profit and loss is determined by margin, which dictates potential gains or losses which may be greater than your initial investment. On the other hand, futures is dictated by physical financial instruments traded on specified future dates. The value and performance of these products are pivotal in determining your success or failure. Some may find more security on speculating the value of commodities while others opt for the liquidity of marginal trading.
Regulation within the Market
Robert Peter Janitzek explains that your choice of trading vehicle will be dependent on individual characteristics as they must be suited to a specific financial market. For instance, if you are independent and unconcerned with conventions, then forex may be the market for you as it has minimal regulations and huge room for profitability. On the other hand, the futures market is highly regulated and is best for people who like structures and rules more than fluid thoughts and actions.
Risk and Reward Conundrum
Your choice of trading vehicle should also include balancing risk against reward. Despite a bevy of risk management tools that will come with your platform, you still cannot discount the threat that your investment will be futile. This threat is more tangible in futures trading where you can short sell to allow profit when they lose value in the forex market.
It must be remembered that while these two options are both viable for aspiring traders, they are part of a far wider range of investment methods. Assessing these two very different vehicles at least helps you to understand more about specific financial markets, however, and the individual risks and be benefits associated with each. You may even find that options, which allows investors to speculate on the future movement of prices regardless of underlying market performance, may well provide a middle ground that offers you a greater degree of comfort.