There is really no comparison between forex and share trading. Fx origins are international and the industry is now a global behemoth, controlled primarily by banks – some of which have balance sheets bigger than entire countries. Fx doesn’t shut down every afternoon; it just rolls around the world to the next time zone. This means that you can start a trade while eating breakfast in Sydney, add on some more contracts as London is waking up and cash out as New York City enters into the fray (or vice versa; forex is nothing but flexible). Where things can get a little stressed is if you’re not used to working with very high debt levels (and forex accounts have some of the highest in the world). For this reason, it’s best if you open up a “demo account” first. Then, after you get your sea legs, you can go “live”.
You don’t need a lot of money to start trading forex. It’s just a matter of finding the appropriate broker.
What Is Forex Trading?
In fx, the price of one currency is expressed by comparing it against another. For instance, if you want to know what is the value of the Australian dollar, you have to decide against what other currency you are talking about (e. g. the euro or the US dollar) because the value will be different. For example, EUR/AUD and AUD/USD have two very different prices. When you trade fx, you are trading these prices. Specifically, you are either trading because you think they are “too cheap”, “too expensive” or you see a trend and you have decided to just enjoy the ride (i. e., you really don’t care which way the trend goes as long as it takes you with it).
How Does Share Trading Differ From Forex Trading?
Shares refer to companies. Forex refers to countries. Sharing trading is restricted to one national stock market. Fx is global and almost not restricted at all. The time period that you can buy or sell shares is limited each day. In forex, you can buy or sell around the clock. In many countries, you cannot sell shares the same way you can buy them. In forex, there’s no difference – in execution or pricing – between a sell order and a buy order. Share accounts rarely let you borrow more than 50% of the value of the holdings in your account. In forex, margin accounts of 2% or less are common. Lastly, the fx industry is immune to individual national recessions or depressions.
What Advantages Does Forex Trading Hold Over Share Trading?
The most singular advantage that forex holds over share trading is its global nature and the fact that trading basically almost never stops. In addition, because there is no supranational regulatory forex agency, the types of accounts available boggles the mind. You have “demo accounts”, “micro accounts”, “mini accounts”, “standard accounts”, “VIP accounts”, etc., etc., with some offering very little margin trading and others offering extremely high leverage ratios. Another difference is the relatively low cost of executing a transaction. In forex, “brokerage fees” are measured in 1/100ths of a percent – not multiples of a percent. Lastly, depending upon where you live, there may be no taxes inflicted upon your forex trading profits (e. g., in Panama).
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