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FOREX vs STOCK Market! Which one is BETTER and WHY?! - YouTube
Channel: ForexSignals TV
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Are you better off trading the stock
market or the forex market? Now, I know
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this is quite a generic question but it
is the one that I come across time and
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time again. So, today, I want to look at
this in some more detail so you can get
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an idea of what the advantages and
disadvantages are of both. Then you can
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make a decision which way you want to go.
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Here we are, back in sunny England for
those of you that have been wondering
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where I've been for last week. Just say,
I've been off the airwaves. I've actually
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been on my annual vacation to the
Philippine Islands flying around and
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exploring though I've factored 7,200
islands that make up the Philippine
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Islands and I was able to explore just
four of them. So here's to next year, see if
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we can take in a few more. Before I
continue on this very important topic of
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what's the preferred route to trade,
either Forex or the stock market, I want
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to remind you to subscribe to my channel
if you haven't already done so. Now, over
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the last couple years I put together a
whole bunch of educational videos. All
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free, once you subscribe to the channel
that will be there at your fingertips to
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explore in your own time. Also, don't
forget to hit the notification icon. That way,
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you're going to be notified the moment a
new video has been released. Okay, let's
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get straight into it. So what is the best
to trade? Well, let me say, I think this
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really does come down to your personal
objective, ss much as anything. Right, so,
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what is the best approach? Well, generally
speaking and I mean this in really
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general terms, stock market investing is
for the longer term.
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So, for example if you have a longer term
objective say a 5 to 10 year plan, you
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might want to look to fund a pension or
indeed, pay for school fees. That
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generally speaking, trading the stocks
will be the preferred approach. If you
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can find some stocks with some decent
balance sheets and decent price earnings
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ratios, and a decent outlook with a good
customer base and a sound business model,
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then that again could be their preferred
approach. Think about it for a moment.
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Most pension funds that make up the
pension industry are made up of stocks
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and bonds, a combination of the two. Very
rarely, do you see a pension fund made up
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of foreign exchange exposure,
and it is there to hedge, of course. So
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stocks are generally, used for more
longer-term investment. If on the other
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hand, your objective is a shorter term,
perhaps you're looking to supplement
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your income; possibly giving up your day
job altogether and become a full-time
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trader, then in that case maybe Forex
might be the preferred approach. And that
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is for a number of reasons. First of all,
I will say this, if you're trading the
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stock market, there are literally,
thousands and thousands of different
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stocks available to trade globally, of
course. If you look at the S&P, for
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example, that's made up of 500 US top
stocks. The Russell index made up of
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3,000 stocks, and of course that's just
in the United States alone. The same in
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the UK and around Europe. The stock
market is made up of multiple, multiple
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stocks getting, a grasp, a handle on any
one individual stock could be quite
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difficult. You've got to do a lot of
research; however, if you're inclined to
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be able to do this research, if you've
got the know-how, and you've got the
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experience that you can analyze company
data, you can analyze balance sheets, then
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of course, stocks can be very very profitable. But there's a whole bunch of stocks
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out there, that you need to do this work
on, and this analysis on. If on the other
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hand, you look at the forex market. Now
the forex market it's generally made up
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of say 10 different currency pairs so
you can actually spend a lot less time
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analyzing an individual currency pair
than the vast array of stocks available
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out there. But again, it does depend on
personal objective, and of course the
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amount of time that you can allocate to
this. Also, if you are inclined to be a
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fundamental trader, a fundamental trader
basically looks at the reasons why a
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stock or indeed a currency pair will
move if you are fundamental trader that
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of course trading stocks may be
preferred way to go because the
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fundamentals are a lot easier to
potentially understand then possibly the
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forex market. Certainly, if you understand
how to read a company balance sheet and
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so forth. If on the other hand you want
to be a technical trader, then I would
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suggest that the forex market might be
easier. The forex market is huge. It has a
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massive participation of about five
trillion dollars a day, made up of retail
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and of course, institutional players. Now, the other
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thing that you need to consider is the
ease of access. It's far easier when
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starting off to access the forex market
than it is the stock market. And often
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people that are coming in to trading for
the first time, only have a limited or
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only want to risk a limited amount of
money when getting going- to see if
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trading is for them or not.
Now, when you start trading the forex
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market, you can start with just a few
hundred dollars but difficult to do that
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in the stock market. Many brokers won't
allow you even to open an account to
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trade stocks unless you have a few
thousand dollars to get going.
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Significantly higher than opening up a
Forex account. Now, the other thing that
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you have to consider is leverage. If
you're starting off with just a thousand
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dollars, then of course the forex market
offers leverage. Sometimes, insane amounts
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of leverage! Now, I don't encourage anyone
to trade with insane amounts of leverage.
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In the old days, they used to be able to
offer 200, 500 to one. I
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think that's absolutely ludicrous. Well,
the video talks about this. You should be
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trading leverage of really nothing more
than really 20 to 1 . The recent ESMA
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regulations in Europe in fact, pull down
the leverage, that's permitted. But when
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you trade in the forex market you have
access to huge leverage, so you can start
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off with just a thousand dollars. If you
were trading trading 20:1 leverage,
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you're basically exposing yourself to
twenty thousand dollars in the market.
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That's not as as easy to do when you're
trading the stock market. So, you need a
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higher amount of money to start with
when you're trading the stocks and
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certainly if you're learning then you
may not want to risk a higher amount
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when getting going to site; to deciding
whether or not trading is for you or not.
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So leverage is available in the forex
market. Much more so than in the stock
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market and certainly you can start
experimenting with small amounts of
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money, to see if you are indeed, have what
it takes to be a trader. The cost of
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trading, generally speaking, is cheaper
in the forex market. Might just pay a
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commission, small commission, and indeed,
the spread . In some cases you won't pay any
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commission at all,. You'll just pay the
spread and it stocks, it's almost certain
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you're gonna spend money on the spread
as well as a decent sized commission.
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Certainly more than the forex market in
most cases. And if you're starting off in
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trading, You know. You're deciding if this
is gonna be right for you, you're finding
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your feet. The last thing you want to be
doing is competing against the broker with
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the fees and the spreads and the
commissions, as well.
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Now, the forex market is open 24 hours a
day. So no matter what timezone you're in,
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there's always going to be a market open.
Of course, not on weekends. Now, certain
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times of the day will be more liquid, of
course, but of course, you can trade
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different currencies in different time
zones to fit in with where the liquidity
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is. You also fit in to your lifestyle if
you've got a day job whatever you may be
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a shift worker or maybe only have a few
hours a day in the evening now if you're
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trading the stocks for example stock
markets are generally open from 8 to 4
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on to the stock markets closed you can't
trade so if you want to trade the US
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stock market generally speaking you've
got to be there when the US stock market
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is open specific times now the next
thing you need to consider is the
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liquidity now the major Forex pairs
generally have super large liquidity
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certainly the Euro against the US dollar
which is the most actively traded
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currency pair out there this means that
you can always get out of a position
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whether it's for a profit or a loss
without too much slippage which is
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basically the difference in the price
that you see on the screen to the price
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that you get fill that now sometimes in
the stocks certainly in the lower cap
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stocks this know that this liquidity is
not always there which means the
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slippage could be higher sometimes
you're in a position you want to get out
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and you can't get out because of the
quiddity has dried up so what you see on
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the screen isn't necessarily what you
get but on smaller accounts this
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liquidity can really affect you you last
thing you want to be doing is losing
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money on the slippage now of course the
higher cap stocks they have normally
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higher liquidity but the higher cap
stocks generally means that the price of
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the stock is going to be higher the
price of stock is higher chances are
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when you're starting off in trading a
smaller account you're not going to be
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able to get much exposure because of the
price of the stock is higher so the
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quiddity is a main factor
super high liquidity in the forex market
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sometimes not as high liquidity in the
stock market if there is high liquidity
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generally the cost of the stock is
higher meaning your exposure to that
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stock is going to be limited now if you
are inclined to be
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technical trader now technical trader
looks at previous price action and looks
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for patterns to repeat themselves they
look at charts to see what prices being
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in the past to see where prices may go
in the future now in my opinion and this
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really is just my opinion that the
technical traders are more angled to the
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forex market than they are the stock
market why because the forex market is
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the largest market on the planet
actually equates to 5 trillion dollars a
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day so the key levels of support and
resistance I think are more respected in
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the forex market because there's many
many more players than there are in the
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stock market which has made me generally
driven by fundamentals more so than the
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technicals as I said this really is a
personal choice based on objectives and
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based on your character are you more
likely to be a fundamental trader where
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you're looking to analyze company
balance sheets and looking for price
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earnings ratios and looking at markets
in general or are you more likely to be
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a technical trader in which case I think
that the forex market might be a
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preferred way to go certainly if you're
starting off the ease of access the
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liquidity sways the Fox market all day
long for me for those that don't know me
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I started my trading career over 30
years ago in the city of London
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standing there in the trading pits look
at that guy there with all that hair
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isn't that amazing for me the migration
from the pits to the screens was quite
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easy because of the fights market I
didn't have all the knowledge about
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company balance sheets and didn't have
that experience for me I purely looked
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at price for me trading the forex market
is much more akin to trading that I grew
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up with in the trading pits that's why
I've chosen the forex market that's why
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it gives me the best opportunity because
it's something that I've grown up with
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whatever choice you decide I hope you
are successful as always if you liked my
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video give me a thumbs up if you didn't
give me a thumbs down don't forget to
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leave a comment and as I said at the
beginning make sure you subscribe to the
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channel so you can access all my
previous videos don't forget to hit that
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notification icon see you notified the
moment my next video is released till
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next video happy trading and good luck
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