Stock Market VS Forex, Should You Bet on Stocks or Currencies in 2020?

In 2020 everyone can become a beginner trader. In this article, we will analyze the two most favored areas of the moment: the stocks of the stock market and the currency market (Forex). What are the respective advantages and disadvantages and what should be favored in the beginning.

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Stock market and Forex: what are the differences?

The Forex market and the stock market have fundamental differences, which will weigh on the balance when it comes to making a choice. First, the Forex market is much larger than the stock market, with $ 5 trillion traded every day, of which $ 200 billion is just for the USD. For comparison, the S & P500, one of the largest stock indices, shows a daily trading volume of “only” $ 4-7 billion.

Another advantage of Forex is that it is possible to trade 24 hours a day, the markets are not subject to stock market openings and closings, unlike stocks. Forex transaction fees are also generally lower than those of stocks. But the latter have for them price variations that can be greater, and therefore greater potential profits.

Finally, another important difference between the two types of investments is the diversity of the assets offered. In Forex, traders mainly trade eight currency pairs which account for the bulk of the trading volume. For stocks, of course, there is no limit.

The different platforms

These two types of investments are therefore well separated. But if you prefer one or the other, know that you don’t necessarily have to rule out any possibility of changing your mind. Most major UK Forex brokers such as eToro or AvaTrade offer both stock and Forex trading. With many currencies (and cryptocurrencies), eToro remains one of the most complete platforms, especially since its stock offering is just as broad.

Good investors stand out for their various portfolios, which help mitigate risk. We therefore recommend that you always favor solutions that allow you a certain agility, in order to regularly adapt your strategy.

What to bet on as a beginner?

Beginners will generally focus on Forex or the stock market, but not both at the same time. On the one hand, Forex trading allows them to focus on a few pairs, and therefore not to get lost in the multitude of stocks traded on the exchange. But price changes are also more frequent, which requires careful price monitoring.

This is why some beginners will prefer actions. These often favor a long-term investment, and it is possible to succeed with less detailed analysis. It should be noted, however, that in terms of initial capital, it is easier to start with a small amount on stocks, while a “small” investor will have to use leverage in Forex … and therefore take greater risks. .

As you will have understood, your choice will therefore be determined in part by the amount you intend to invest, but also by the level of risk you are ready to bear. Both the stock market and forex are fascinating investment areas that are worth exploring even for beginners, so there is no wrong choice!


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