All the new people considering investing in Forex trading are usually also considering day trading in the stock market. We all have friends who suggest we trade in the stock market rather than Forex. Hence, most new traders are confused about the benefits and betterment of the two platforms.
This article clarifies the difference between day trading stocks and Forex trading. By the end of this article, you will have a clear mindset about both platforms, and you will be able to choose the right one for yourself.
Before comparing the two trading platforms, let us look at each of them individually.
Forex trading
A foreign currency exchange platform, or Forex trading, is open for all trading markets where traders predict the price of a currency pair. Brokers offer exposure to the Forex market and introduce the parameters such as spread, pips, and leverage. Traders must account for the potential risks and profit and estimate the value. Previous knowledge and Forex graphs make the trading experience better.
Stock Exchange Trading
Stock market trading is not available universally. There is also a time limit for the stock market, and it does not stay open all the time. Several companies offer their shares on a stock exchange for a certain price. Traders can buy and sell these shares. Based on the company’s supply/demand and performance, the shares can either lose or gain their value.
Day Stock Trading
Many traders can not or do not want to wait for long periods. Hence, they buy and sell shares on the stock market within a market day. This type of trading is usually done for faster profits.
Key Differences
Here are some major differences between day stock trading and Forex trading.
1. Market Hours
Forex trading platform performs on four global sessions. This means that the Forex platform is available to the traders during the trading week. Traders can log on to the Forex platform 24/5 and invest money in the currency pairs.
However, the day stock trading does not offer the same trading hours. Almost all stock exchange markets close during the day and open in the morning. There is also no global support for traders.
2. Leverage
Leverage is not a straightforward concept. Based on the type of trader and trading, it can be good or bad—the amount of exposure that a broker offers to the trader on the trading platform.
In the United States, the leverage for the stock market is limited at 2:1. However, Forex brokers offer up to 50:1 and 500:1 in South Africa.
More leverage can be a good thing if your traders are going in profit. However, higher amounts of leverage can easily destroy trading accounts if there is a substantial loss.
3. Profitability
The profitability of both trading platforms depends on the trader. If the trader makes smart decisions and choices, he/she can succeed on either of these platforms.
However, day stock trading would require a higher investment than Forex trading. The forex market offers higher liquidity, and it is more volatile. These are not the best features of the Forex market. However, new traders appreciate the Forex market because it has the make-or-break quality.
Bottom Line
The day stock trading vs. Forex trading debate comes down to personal preference and circumstances. If you are careful with your money and do not take huge risks, day stock trading might interest you more than Forex trading. However, the Forex market is more favorable for people looking to make a fortune quickly, but it can turn out to be relentless. If you want to learn about the spread in forex, pay a visit to our blog.
