Is Forex Profitable Than Stocks?
Stocks used to be the face of trading for a long time and people have started shifting to other options as well. Forex being the most heavily traded format now, many uncertainties surround the trade since it is relatively new to the market. Aspiring traders can always look up for the factors that lead to a successful trade to invest in a profitable market. But when you are trading for the first time, you need to have a clear picture of what benefits and risks the business entails. Comparisons between stocks and forex have been a subject of discussion for a long time, but no certain answer for the better trading option has been found yet for the fact that both have their set of merits and demerits.
The type of trade that you want to opt should be dependent on your preference. But the question that matters here is of forex’s profitability being better than that of stocks or not. Knowing the trading style that suits you more will help you decide on what to choose between the two. Try learning more about both these options to gain better knowledge about them. Here are a few differences between forex and stocks that will enable you to picturise both on a wider canvas, so that you can see for yourself if forex is profitable than stocks.
Differences Between Forex and Stocks
Size of the markets is one of the most significant differences between stocks and forex. Trades of around $5 trillion is made in forex every day, of which, most of the exchanges are concentrated on the major pairs like EUR/USD, USD/JPY, and GBP/USD. On the other hand, the dollar volume of every stock market in the world would average only about $200 billion every day. High volume can always be of an advantage to the traders by helping them get their orders executed closer to the rates they want and easier than the low volume trades.
High liquidity generally comes with high volume, and it would result in providing you with lower transaction costs and tighter spreads. When compared to stocks, the major pairs in forex have low transaction costs and spreads.
3. Duration of Markets
Since there are no traditional exchanges for the transactions in forex, an interbank market is facilitated. That allows the trade to continue in different parts of the world for 24 hours a day. Therefore, the traders can access the trading platforms for five days a week and the whole day round on these days.
Forex brokers make a margin on the spread rather than from commissions. So, you will have to pay minimal to almost zero commission when trading forex, whereas the case is not the same with stocks.
Since forex has a narrower focus than stocks, you can easily choose from the eight currency pairs available. On the other hand, when going for stocks, there are thousands to focus on, which could confuse you and lead you into making the wrong decision.
Now that you know the differences between the two, it would be easier for you to choose. The trade that you opt for should suit your taste and habit of trading. Forex can surely be profitable than stocks for the fact that it has certain advantages as mentioned earlier, and you wouldn’t lose a lot of money in forex if you play with the right strategies.