Forex vs Stocks: Which is best for beginners?

Beginner Questions
1

Newbie traders often compare forex vs stocks in an attempt to figure out which market is better to trade. Despite being interconnected, forex and stock markets are fundamentally distinct. Trading forex vs stocks often comes down to determining which trading style will suit you best. Understanding the similarities and differences between the stock and forex markets will allow traders to make informed decisions based on market conditions, liquidity, and volume.

Forex (also known as foreign exchange) market is the largest and most liquid financial market in the world with an endless range of major, minor and exotic currency pairs. Traders are attracted to the forex market because of its unique characteristics like high liquidity, round-the-clock trading, and the amount of leverage it offers. Forex traders use pip values to determine if the market is moving up or down. The top 7 major currency pairs in forex trading are EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/CAD, USD/CHF, and USD/JPY.

Stock market trading enables traders to speculate on the value of blue-chip and penny stocks, two popular assets with opposite values. The stock market comprises some of the most promising shares issued by well-established and financially stable companies like Microsoft, Apple, and Amazon. Despite challenging economic conditions, most of these stocks have paid dividends for years.

Despite offering unique opportunities, each financial market has its own advantages and disadvantages, which makes it more suitable for certain types of traders. Now let’s look at the key differences between investing in forex and stocks.

2

I have also started with forex trading keeping in mind currency pairs have huge volatility and this gives opportunity to make profit.

Btw, couldn’t find differences.

3

forex is more volatile as compared to stocks but where there is risk there is more returns so if you have knowledge of when to enter and exit the trade then you can trade any asset.

4

Forex trading is more of a pure TA approach - there is very little fundamental data that can be applied to influence trading decisions in forex.

Apart from across weekends there are no overnight gaps in forex so its impossible that a forex pair will open trading one morning having gapped past a trader’s order price level.

Speaking as a UK trader, I get better leverage and use less margin on forex trades than equities.

5

Is nt fundamental analysis just an overview of fundamental data ?

6

I suppose to me fundamental means everything concerning an instrument which isn’t on a price chart.

7

[quote=“tommor, post:4, topic:675281”]
Forex trading is more of a pure TA approach - there is very little fundamental data that can be applied to influence trading decisions in forex
[/quote] sorry tommor I found the sentence a bit confusing i would appreciate if you could maybe expand abit more on what you mean.

8

I hold to the view that everything worth knowing about a forex pair is in the price chart - except the dates of forthcoming events on the economic calendar such as interest rate announcements, NFPR’s, inflation data, unemployment data, GDP data. I find it advisable to be aware of the dates, not the data.

9

Ok thanks for the reply,yes you answered my question I understand your point now it probably made the post more informative for newbies now anyhow

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10

Thank you. A pet hate is the advice fed to new traders that they must understand everything about currency, money, GDP, banking, fiscal policy etc. before they can trade forex profitably. This advice is always unsubstantiated, except by the bland assertion that the big banks pay no attention to MA’s.

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