Know the difference between Forex and Stocks, which is more profitable?

What is the difference between forex and stocks? Which is easier for us to understand? Which gives the greater profit?

Come on, fulfill your curiosity through this one of my Financial articles!

Summary

  • Trading is an activity of buying and selling in a short time, in the daily range.
  • The forex market has a larger market capitalization so it is more volatile than the stock market.

Difference between Forex and Stocks

Trading is not only about forex , but also other assets, one of which is stocks. Both of them make traders confused to determine which one is more profitable.

This article, will thoroughly explore the differences between forex and stocks, the advantages of forex vs stocks, and other matters concerning the two.

First, let’s talk about the differences  first. There are several things that make the difference between the two, namely:

#1 Definition and Number of Products Each Transaction

The most basic difference between forex and stocks is the meaning of the two which are different.

Stock trading activities include buying and selling shares of a company with the aim of making a profit.

This activity tends to be different from stock investing, where investors usually make investments for us to maintain for a long enough period of time to make a profit.

While trading, investors make investments in the short term, in the daily range.

Meanwhile, forex trading is an activity of buying and selling foreign currencies that many people need to:

  • God needs a vacation abroad
  • Buying goods from abroad
  • Business activities

The forex market has a number of major, minor, and exotic pairs that investors can trade and trade.

You need to remember, that forex trading is different from binary options. To find out the difference, you can check the following video.

Stocks have more than 10,000 issuer products that investors trade around the world, in contrast to the forex market which doesn’t have a lot of options.

#2 Trading Hours

The forex market always operates 24 hours, 5 days a week, while the stock market, has a time limit for transactions, adjusting to the exchange hours in their respective regions.

In Indonesia itself, the stock market starts trading at 09.00 am to 16.30 WIB.

While in the forex market, there is no holiday on weekdays, but it is divided into four sessions, namely:

  • Asian Trading Session
  • European Trading Session
  • American Trading Session

Each of these trading sessions has its own characteristics that we need to understand in order to get bigger profits.

 

#3 Market Volatility and Liquidity

The next difference is about market volatility or fluctuating levels of the stock market and forex market .

The forex market is known to have higher volatility than the stock market, so traders can earn a lot in the short term.

In direct proportion to that, there is also an opportunity for traders to lose money if they do not do the analysis correctly.

You can find out how to properly analyze trading in the following free ebook .

Meanwhile , the stock market has lower volatility than the forex market, so big profits will be obtained when investing in the long term.

Then talking about liquidity, the forex market still has quite high liquidity, allowing traders to cash out their profits easily anytime and anywhere.

While stocks, funds that enter the exchange need to be redistributed to hundreds or even millions of shares every day, so the level of liquidity is lower than forex .

 

#4 Market Fluctuations

The  fourth difference is market fluctuations, where the forex market has higher fluctuations compared to the stock market.

This is influenced by the difference in market capitalization between the two, where the forex market has a larger market capitalization.

#5 Margin Trading

The last difference is margin trading, also known as leverage .

The forex market has unique characteristics, where the margin obtained can reach a very large value, so it is not impossible if traders can get big profits with relatively small capital.

As for stocks, the market has less margin than forex, but the advantage is that it has safer risk management.

The loss rate in the stock market is much lower than the loss rate in the trading market .

 

Which is more profitable and easier for us to understand?

Then, talking about the advantages of forex vs. stocks, which one gives you the bigger profit?

If we draw a conclusion from the differences between the two  above, it cannot be concluded which one is more profitable between the two.

Because this problem is actually not an objective problem, but a subjective one . Only traders themselves can determine it.

Therefore, you first need to understand both practically and theoretically before making a decision.

Leave a Reply

Your email address will not be published.