Why currency trading is better than stock trading

Why currency trading is better than stock trading
(source: Chronis Yan on Unsplash)

Both currency trading (also known as forex trading) and stock trading have their own unique advantages over the other. It is important to know first what your trading goals are — do you want to trade quickly and efficiently, or do you prefer to do what’s known as swing trading, based on a predictable pattern and strong fundamentals?

Let’s talk about a couple of reasons why you would prefer to trade in the forex market rather than in the stock market.

1. You don’t want to care about fundamental analysis

Fundamental analysis is so useful when evaluating which stocks to choose from among hundreds. Even though fundamental analysis is based on official facts and figures, their interpretation can actually lead to speculation. It is therefore more appropriate for long-term stock trading and stock investing. 

In the forex market, fundamental analysis could be useful to let you know whether the currency pair is generally bullish or bearish. However, forex markets tend to stabilize at presupposed market levels.

These forex market levels are generated by the self-fulfilling prophecy effect of traders relying on technical analysis such as the 50 and 200-period moving average, the MACD, and candlestick patterns. If you are more comfortable with technical analysis, forex trading may be for you.

2. You want to be in a volatile market

Intraday trading in the stock market is possible, but may not generate enough fluctuation to provide numerous trading opportunities for you. On the other hand, a forex pair will fluctuate many times between a small price range. 

These small price ranges will offer insignificant profits (a typical movement of 10 to 50 pips will generate at most 5 cents for every 100 dollars). 

However, with the availability of margin trading in all forex markets (which is not offered by a lot of stock brokers), a small price change can be magnified or leveraged using margin trading. This can be repeated several times throughout the day, ensuring consistent profitability in any trading day.

Swing trading is not necessary in the forex market, as the forex market rarely makes large swings over several months as seen in many stock charts. However, if you are a speedy day trader who enjoys the thrill and adrenaline of earning fast profits, the forex market is for you to master.

FBS is one of the best forex brokers

We use the FBS forex trading platform to generate high income consistently. Many FBS users have preferred to take on trading as a day job, which offers a reliable source of income almost 24 hours a day. Are you interested in learning to trade? Go check out FBS.com for amazing beginners’ offers.

Posting Komentar

0 Komentar