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Forex vs Stock Market: What is the most Profitable?


Traders operate mainly on Forex and on the stock market. But which offers the best opportunities? Here is a brief comparison of the two most liquid markets in the world.

The first decision that new traders must take approaching the financial markets is undoubtedly the choice between Forex and stock market. We will write only about these two markets because brokers allow them a greater access than other types of segments. Professional traders are able to operate on more or less all markets: from Forex to shares, from bonds to commodities and so on.

Forex vs Stock Market: What is the most Profitable? - Soloforex

Basically, it is believed that the Forex market is the easiest to start. This is because the currency market respects more technical analysis rules than the stock market where instead counts also the fundamental analysis.

For Forex trading there is no need to analyze financial reports, management changes and assessments of business societies but traders can simply follow the rules of technical analysis.

For the stock market, however, a share reflects the value of a company and it will be important to know how to evaluate it, follow the evolution of every annual financial statement and financial reports and be aware of every key aspect of the issuing company.

It is not the same for currencies that, although some of them are correlated with other, basically follow a trend dictated by central bank decisions.

Forex traders are closely following macroeconomic news and market movers that have a strong impact on the currency market.

The stocks tend to have relatively high fluctuations while the currencies generally move in a predefined price range unless substantial changes in the monetary policies of the central banks.

A very important element that distinguishes Forex and stock market is the leverage; in fact, a maxi-devaluation of a currency may lead to higher losses than a strong fall of a share.

In Forex you can access to very high financial leverage depending on the broker you decide to use. This allows Forex traders to enter the market with much lower amounts than the capital needed to invest in stocks.

In the comparison between Forex and stock market we need to consider also variations. The stocks vary by several percentage points each session, while exchange rates are unlikely to exceed 1% of daily variations.

Forex market is by definition the most liquid market in the world, as investors belong to the most diverse parts of the globe fueling the ability to enter orders immediately executed on the market.

The stock market however has a lot of limitations, because if a trader invests in thinly traded stocks there is a very high possibility that he should wait some time to see the purchase or sale order run.

As a final point, we include accessibility at local or international level.
The stocks reflect trends and regulations of the nations to which they belong and thus do not have a lot of international exposure. It is quite the opposite for Forex, accessible by all countries.

We will not give you a final answer to the initial question because it is too subjective. The investment and risks that every trader decides to take are different. The choice is yours.

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