At the beginning of the journey, each future investor, trader stands at the crossroads, where he should choose which direction to go. The choice is actually not that great. If we talk about speculation, you have access to the Stock Market and share trading or currency Forex. Many can add binary options to these two points, as one of the know-how of recent years. However, to be honest, BOs are bets that have nothing to do with real trading. However, the choice will be difficult. Despite the similar principle of operation, globally they are different.
Actually in this article we will try to compare two global areas of earnings and give our recommendations to beginners. Criteria for comparing stock and currency trading As we have already noted, trading in stocks and currencies, despite the general similar principle of operation, in practice are very different. This is primarily due to the fact that markets are different globally, which means that the specifics of work and trading conditions that brokers can offer us differ in the first place. In order to compare, we offer you the following criteria for consideration: Basic availability; Commission rates and principles of their formation; Number of trading assets; Guaranteed return and risk; Number of professional analysis tools; Basic Availability Undoubtedly, stock trading attracts with its potential. After all, all the bright films, books and stories about the stock exchange, one way or another, affect the stock market. However, have you ever considered from a financial point of view, is it affordable for a simple man in the street or not? For example, Apple shares today are worth $269 per share, and Coca-Cola is $50 a share. Now add some commissions to that! Of course, you can object and use the Moscow stock exchange as an example.
However, a recommendation of several thousand dollars for local exchanges (Ukraine also has its own stock exchange), as well as a strong top ten for foreign ones, are far from being taken from the ceiling. With the foreign exchange market, the situation is completely different. Literally 10 years ago, traders could only use classic accounts, and the minimum amount was a few hundred dollars. After the advent of cent accounts, even a schoolboy, having saved several times on lunches, will be able to open his first transaction. Therefore, no matter what anyone says, the currency market in the truest sense of the word can be called "People's". Commission rates and principles of their formation The stock market is a place where they will try to skin you all ten! The most interesting thing is that they will do this for different reasons, but one way or another it will concern commissions. The fact is that a trader, an investor is charged with an exchange commission, a broker's commission for trading turnover, a commission for the existence of your account, and even a commission for the fact that your securities are on deposit.
By the way, many lose their first deposits not because they misunderstood the direction of the course, but because they did not fully take into account all possible costs. In the case of the foreign exchange market, you need to remember all two commissions - the spread and the swap. The first is the difference between Bid and Ask, and the second is charged for the transfer of the position to the next day, depending on the difference in interest rates. However, the value of the swap is so small that in most cases it is not even taken into account. Number of trading assets Trading stocks with the right brokers will give you an incredible amount of trading assets, ranging from blue chips to unknown newcomers to the market. However, for the most part, traders limit themselves to the Russian market, since the size of commissions and the complexity of working with foreign shares scare away a huge number of people. The foreign exchange market is a huge field for experiments.
The fact is that classic Forex has been incredibly transformed after the advent of CFD contracts for difference. Today you can earn not only on the difference in exchange rates, but also on the difference in the prices of stocks, futures and even indices. Of course, these are derivative assets for which there are no dividends. Nevertheless, their number is impressive and no less. Guaranteed return and risk The most important advantage of working with stocks is the minimum guaranteed return. Yes, you can incorrectly predict the exchange rate and cost, moreover, at the time of fixing the transaction, you can lose a significant amount. However, as long as you own it, you will receive dividends.
By the way, there is a saying in the stock market that investors are traders who could not put up with a loss due to a fall in the value of an asset. The foreign exchange market is full of risk. There are no opportunities to get an additional plus, except for the accrual of a positive swap. However, Forex has the most important tool that allows you to get phenomenal returns - leverage. Its values can be phenomenal, allowing you to open trades for amounts that are 100 or 500 times your own deposit. However, this potential can also work against trader. Number of professional analysis tools Many beginners think that QUIK is an incredibly poor platform in terms of functionality.
They are partly right, especially when compared with the opportunities that the fourth and fifth generations of Meta Trader give us. However, this statement is only partially true, because there are programmers who can implement simply incredible things for this platform. Moreover, let's be honest, the stock market is a battleground for huge wallets. Therefore, no matter how strange it may sound, it is breakthrough developments that appear here in the first place. Another thing is their availability, because you will not find anything free for yourself. Hundreds of free indicators, robots and even scripts can be found for MT4 and MT5. Everything that can come to your mind, with a probability of 90%, has already been implemented and thrown into free access.
Moreover, the cost of programmers' services, due to the complexity of implementing ideas, is also at completely different levels. What to choose for a beginner From our point of view, stock trading will be an excellent choice for those who are looking for imaginary stability and minimal but guaranteed profit. Only by trading stocks can you build a portfolio to live on dividends. But trading stocks is expensive and difficult. Moreover, it is doubly difficult for a beginner, since the devil will break his leg in all the costs and features of the platform. The foreign exchange market is simpler, more accessible and potentially profitable due to the possibility of margin trading. Therefore, in order to get off with little blood and the damage of the first experience was not so great, we recommend starting with it, especially since there are cent and demo accounts.
.