In this article we will know about, Forex vs Stocks, which is more profitable? As we all know that forex and stocks are 2 Separate markets in which people can invest and trade in. Before understanding that which is more profitable, let’s understand the meaning of both the markets.
What is Forex?
To put it simply, Forex trading is the exchange of currencies when travelling internationally. In this case, a trader buys one currency and sells another. The most important thing to know is that the exchange rate changes from time to time. The currency rate volatility is controlled by two factors: supply and demand.
Forex trading has occurred in the foreign exchange market. The foreign exchange market is a location where people can buy and sell currencies. In general, monetary institutions, banks, businesses, investment management funds, retail forex brokers, and investors make up the Foreign Exchange market. The currency market is the largest market in the world.
What is Stocks?
A stock consists of shares of a company by which the ownership of a company is divided into a single share of a company. It means the fractional ownership of the company in proportional or in against to the total number of shares. The stocks can be bought and sold on stock exchanges. These stock exchanges are overseen by the government bodies which helps to prevent frauds and to protect the investors. Every country has their own stock exchange market by which people can buy and purchase the stocks.
Let’s understand the difference between the forex and the stocks
- Trading Hours
There are different trading hours in Forex Market & the stock market. The 4X market is open 24 hours a day and five days a week, on the other hand the stock market is open at a set timetable in a set trading hours.
- The Assets Volume
There are limited number of assets or pairs which can be traded in Forex trading. There are more than 330 currency pairs which includes the major, minor and the exotic fx pairs which can be traded. But on the other hand the stock markets trade volume is around $5 billion per day. There are numerous category of shares in which a person can trade. These are technology, pharmaceutical and automobile industries. Not only this stock market also have blue chip stocks and penny stocks also.
When it comes to the volatility, the volatility in the forex market is high as compared to the stock market. Many people in forex market comes with this strategy of investing in very short. With the intention of making a high profit but on the other hand this is not the case in stock market necessarily, as people invest their amount for long term.
So the conclusion is that if a person want to make small and frequent profits, then the Forex is more profitable than stocks. It also depends on the strategy, entry and the exit time from the market.