Stocks are issued by the companies to raise money to run the company. Each and every stock a person own represents his part in the company. It is one of the most popular form of investment as it is easy to understand and implement compared to other investment. Then how does it differ from the forex market.
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- Stock or share prices fluctuates depending upon the company fortune, which is management, profit, competence in the market etc. so when the price rises, its all about selling the shares and taking the profit or wait for the next opportunity to get a better deal.
- In stocks, there is a concept called dividend. Dividend is a small percentage of profit paid by the company. Only a few companies offer dividend. The advantage of dividend is that you will be paid the dividend even if the market fluctuates.
- There are few companies which trade in all the markets like the Johannesburg Stock Exchange, London Stock Exchange, New York Stock Exchange etc. Stock market can be used as a long term and short term strategic trading. Long term traders are those who invest in a reliable company and take part in its ups and downs. short term traders are mostly totally dependent on market for their living and they trade on daily fluctuations of a share.
- There are few companies which holds the status of Blue chip stocks. These are the stock which have the long term trading value which in short means the companies which had earned reputation. With the advent of internet, now stock market offers day trading which involves high risk trading.
- Day traders use the fluctuations in the share price to trade. This type of trade involves high risk and brokers charge high commission as the option of leverage is available. One can expect up to 50% leverage which means you can trade with just half of the money required and the rest will be paid by the broker.
- Forex might seem very similar to stock trading but the concept behind forex is a little bit different. Unlike stock trading, forex involves in trading currencies, which is selling US dollar and buying GB pounds or vice versa or other currencies.
- Like we have stock brokers in share market, there are no brokers in forex market. So you can execute as many trades as you want. Compared to stock market which only trades about USD 100 billion, forex trades are about USD 5.3 trillion. So Forex trading is considered to be the most volatile in the world.
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