With the advent of the internet, ordinary people without professional trading knowledge can now easily invest in financial markets such as Trading Forex or stock exchanges.
During pandemics, the number of new traders has tremendously increased due to the significant opportunities for profits. People were looking for ways to monetize their time spent in front of computer screens. If you are still hesitating, we share some explanations regarding what Forex and stock trading comprise.
Choose the right broker
To start online trading, you will need to open a trading account on the brokerage platform. To choose a reliable broker, check out the Forex broker list. Most of the brokers offer multiple asset trading such as cryptocurrencies, foreign currencies, and stocks. You will need to look at the quality of the platform they offer for trading.
Also, it must be user-friendly because you will spend some time there to monitor your positions. It is also essential to verify if the broker is easily reachable? Is customer service friendly and available?
You must also take into account the financial regulatory authority that has approved a trading platform. A broker who is regulated inspires more confidence.
The difference between Forex and stocks
The main difference is that if you own stock in a company, you become one of the company’s owners. In Forex, you own the money. A forex position has no intrinsic value. Also, if you own a stock, you will likely receive dividends.
The price of a stock in a financially healthy company should typically rise over the long term. On the other hand, the value of a currency pair tends to fluctuate rather than rise over the long term.
Forex is, therefore, a speculative market. It’s not suitable for long-term strategies and investment. It’s not an investment market. You make money by speculating whether a currency will rise or fall over a certain period.
Another difference is that Forex traders very rarely take the currencies they buy. Forex is not based on material ownership.
Finally, the stock market costs more. It takes more capital to buy a share. For example, with 1000 euros, it might not be lucrative buying shares, plus there are management costs and brokerage fees. On the other hand, with this same sum, you can profit from Forex.
Should you start on a real or demo account?
At the very beginning, the demo account is your best friend since it allows you to learn the trading basics. But you will not learn the ropes of trading using a demo account because the psychological aspect does not come into play enough.
You will be faced with situations that will not be easy to deal with psychologically. Just as you don’t learn to surf sand, you don’t learn how to navigate the Forex market with just a demo account.
However, a demo account can be very interesting to familiarize yourself with a platform or test new strategies. All you have to do is find a broker you like and open a demo account on it. Or, if you want to get down to business straight away, open a real money account and invest a little capital there.
In Forex and stock market, it is possible to make a lot of money. Talented traders can earn a good amount of money in Forex quickly by starting with a modest starting capital. However, many beginners lose their starting capital.
That’s because it takes time to find a trading strategy that is right for you, just like it takes time to learn how to manage risk. Before you begin, you should realize that learning to trade profitably takes time, money, and a lot of patience. And always remember the fundamental rule: don’t start with capital that you are not ready to lose.