Trading is one of the most exciting, yet challenging careers in the world. Whether you trade the Forex market or invest money in stocks, chances are very high you have struggled at one time before you started making consistent profits from this market. For this very reason, many people quit this profession. However, things have really changed as more brokers are extending their services to their retail clients. In the past, people had to invest huge amounts of money to trade the Forex market. But with the introduction of high leverage trading accounts, people can easily trade the Forex market and make a decent profit without investing huge sums of money; i.e. enter into day trading of forex. The same cannot be said about stock trading because the leverage in stock trading is very low in comparison.
Day trading the Forex market
When it comes to day trading the Forex market, people think about quick profit. Forex market is the world largest financial market and every day more than $5 Trillion is traded across the globe. Due to this massive number in terms of the transactions, the market is extremely volatile compared to the stock market. More volatility means, you have more opportunity to make a profit by taking advantage of the fluctuations of the Forex market. However, with bigger profit, comes extensive risk, a single mistake could lead to massive losses.
The professional day trader in the Forex market trades the market with managed risk. Unlike the novice traders, they typically never risk more than 1% of their account balance. No matter how hard you try, you will occasionally have some losing trades. However, if you trade the market based on high risk-reward trade setups, chances are very high you will become a very successful trader within a short period. The choice of the right forex broker partner is critical as they provide the right trading platforms and educational / strategy insights.
Those who are involved in the stock trading business must have heard about the term blue chips. These are nothing but the most popular stocks in the world economy. In comparison with the Forex market, the stock market is not that big. Moreover, you will have to invest a huge amount of money since the maximum leverage hardly exceeds 1:5. However, the price movement of these reputed stocks is much more stable and the chances of making a consistent profit with low-risk exposure is a little bit higher. Still, you need to consider the fact that you must invest a substantial amount to make any meaningful gains.
The ultimate verdict
To be honest, no one can give an outright verdict and say one is better than the other is. It all depends on the person trading the market. For instance, if you prefer trading 24 hours a day, stock trading is not the perfect fit for you. Stock trading time is limited to 9:30 AM to 4:00 PM Eastern standard time. On the contrary the Forex market is open 24/5 and you can easily place a trade in your online trading account. On the same note, Forex carries with it higher risk than the stock market. Neither of them is better than the other, it all depends on your trading strategy and your personality.