Investing on the stock market and forex market can be a lucrative venture. When done right, it could give the investor a continuous income stream. Deciding on which market to invest on can be a daunting task. There are many factors to consider in order to make an informed decision. Robert Janitzek provides us with some tips to help you decide whether to invest on stocks or forex.
Risk Tolerance And Trading Style
One of the main features of the forex market that makes it attractive to potential investors is its high liquidity. Stocks, on the other hand, can deliver profits despite challenging economic conditions. At the same time, they have a history of paying dividends. So if your prefer liquidity, forex is the perfect choice. If you are after profitability even in tough conditions, invest on the stock market.
Volatility is defined as the measure of short-term price fluctuations. When trading on the stock market, some short-term traders depend on volatility in order to profit from quick price swings in the market. However, others prefer the less volatile and less risky investment. For this reason, short-term traders invest on forex while buy-and-hold prefer stocks.
Leverage provides the springboard for building equity with a very small investment. The stock market has a 2:1 leverage while the forex market offers a 50:1 leverage. However, it is worth noting that leverage is not a good thing. It can also destroy a trading account.
The trading hours can also be a crucial factor in deciding whether to invest on stocks or forex. Robert Peter Janitzek reveals that trading hours for stocks are usually the exchange hours while for forex, it is usually round-the-clock.
Simplicity of Market
There are around 2,800 stocks on the New York Stock Exchange and another 3,100 in NASDAQ. In Forex, while there are dozens of currencies being traded, only the four major pairs are traded. Here, obviously one will know the better investment option.
Susceptibility To Manipulation
The stock market can be subjected to manipulation. By buying and selling in larger amounts, large companies can move certain stocks. They are also susceptible to analyst’s recommendation and news events.
Meanwhile, compared to stock market trading, the forex market cannot be manipulated. Large companies do not have the capability to move a currency. Even banks cannot manipulate forex to move the price of currencies in their favor.
The debate on which between stocks and forex is the best investment option will never end. Hopefully, this article will help you decide.