XPro Markets – A Beginner’s Guide to Trading: Forex or Stocks?
Being confident enough to be part of the global online trading market requires understanding what you are actually looking to invest in. It seems obvious, right? Well, it might not be as simple as you think and that’s why our team at XPro Markets has created this article to clear things up for you.
One of the most common questions from a beginner is whether it is better to trade Forex CFDs or Stock CFDs. So if you’re one of the many newcomers to the world of trading wondering which is the best market for you, between Forex and stocks, today’s article will walk you through the basics.
What is the difference?
Remember that CFDs are “contracts or differences”, which means that they are a derivative product because they allow you to speculate in the financial markets, without having to take ownership of the underlying assets.
Forex CFDsalso known as the forex market, gives you the ability to predict the direction in which you think the price of a currency pair will move.
Share CFDs refer to the partial ownership of a company’s assets and profits, with the profit or loss calculated as the difference between the purchase price and the sale price.
What are the factors to consider?
Although, of course, the first main point to consider is which market you actually prefer, there are some additional aspects that might help you narrow down your decision.
To start, market trading hours differ for forex and stock trading. The forex market is open 24 hours a day, 5 days a week, while stock exchanges around the world open at different times, depending on the region and the exchange. For example, the opening hours of the Hong Kong stock exchange will not mirror those of the UK, due to general differences in labor culture and policy. It is also important to know that public holidays around the world can affect different assets. XPro Markets therefore ensures that you stay up to date with all upcoming financial market holidays.
Another aspect to consider is price fluctuation, which is measured by volatility and liquidity. Many short-term forex traders look for high liquidity in the market, in order to buy and sell faster, while stock market traders open positions aiming to take long-term profit, thus expecting an environment less volatile. Chart analysis tools can help you stay in the know by better analyzing the price swings of their favorite assets.
Finally, let’s think about how each market is influenced and the importance of staying up to date with global market news. When trading stocks, certain things can directly affect your chosen asset, such as debt levels and company earnings, as well as economic data and news. But with forex, the focus is usually on the macroeconomics of each currency host country. For example, unemployment, inflation and gross domestic product (GDP) are aspects that could strongly affect the forex market, as well as major political events.
So which one do you choose?
There is no definitive answer. Every individual trader is different when it comes to personality, experience, and preferences, and that’s what keeps the markets booming. Some traders may choose one market to start with, while others trade several. It’s up to you to decide which market best suits your daily routine and personal style. It is essential to take the time to review each option and its specifications, so that you can reach a final decision.
Which do you think would help you reach your trading potential?