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Stock Market Vs Forex for Beginners

Stock Market Vs Forex for Beginners



One of your office colleagues told you that his neighbor has made millions in less than a month. You are absolutely surprised and curious to know as how someone can make or earn money in such a short span of time. You ask him how it happened and you get the reply: by investing in the stock market and Forex. Hearing these terms for the first time is enough to confuse you, but fret not. It may be a tad challenging for the beginners to understand the meaning and difference between the two terms; stock market and Forex, but when broken down, it become quite easy to understand.

What is the Stock Market?

A stock market is essentially a place where the individuals buy or sell shares of the public listed companies. It facilitates the investors and stock brokers to engage in the trading activity. It is important to note that the shares of a company can only be sold or purchased if it is listed in the stock market. The smooth functioning of the market is considered necessary for the smooth functioning of a country's economy as it gives a platform for the companies to raise funds from the public for meet their capital requirements. There are some necessary rules and guidelines issued by the stock market for the companies with regard to getting listed and issuing shares.

If you purchase a share, then you become a shareholder of the company. If there is any rise in the profits, then you are also entitled to receive a share in the profits. If the profit of the company decreases, so does the prices of the shares.

What is Forex?

Forex refers to Foreign Exchange, which is one the largest markets in the world. As the name implies, it is an international market where the currencies of different countries are traded. It involves buying or selling of the currencies at their present rates. An individual can trade any time of the day because of the forex market remains open 5 days a week, 24 hours a day.

It is important to note that there is no central marketplace for trading the currencies as in the case of the stock market. Trading is done over the counter any time of the day, which results in the price fluctuations throughout the day. For example, if you have ever traveled to the United States (U.S) from India and exchanged your Rupees for the Dollars, then you have done forex trading.

Comparison Between Stock Market and Forex

  • Now that you have understood the meaning of the stock market and forex, let us have a look between the two terms:
  • There are lots of stocks to trade in the stock market. On the other hand, there are only few currencies to trade.
  • There is more risk with the stock market when compared with the forex market.
  • A lot of intricate details and research work is required to engage in stock trading activity. To trade in the forex market, all you are required to have a good knowledge about the currency patterns.

The stocks can seldom go negative or zero. On the other hand, you can go bankrupt in the matter of second of minutes or seconds.

You have to be little patient to get good returns form the stock market, whereas, in the forex, you can earn lots of money in short period of time, provided you know how to trade the currencies.

Which is Ideal for the Investors, Stock Market Investment or Forex Market?

Most of the experts are of the view that it is not a matter of the skill levels but financial objectives of the individuals that determines whether they should invest in the stock or forex market. If you have a long-term goal in mind, like buying a house or providing higher education to your kids, then a stock market investment can turn out to be extremely fruitful. On the other hand, if you have short-term financial goals and want to earn money fast, then the forex market can turn out to be much better choice.



About Author

I have 7+ Years of experience as a research analyst. I have seen lots of ups-down in finance market. Currently I am associated with Advisorymandi.com. It is a unique platform between advisers and traders/investors where they can easily connect with each other for stock market, commodity, Forex market, and live Economic Calendar related information, guidance, and advisory etc. It is the platform which provides pragmatic and unfathomable research and advisory in the stock market, commodity market, future & options, and currency market.

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