The Forex and the stock market can both look very enticing if you’re new to investing. Forex investing is often sold as the most beginner-friendly option, but is it?
Most people who invest in Forex end up either losing or breaking, even when they’re not making modest gains, and newcomers are often disappointed with the results. Stocks, on the other hand, have been greatly democratised over the last few years, and could actually be a better option depending on your needs. Trading stocks still has a steeper learning curve, however. Let’s take a closer look at both the forex and stocks so you can get a better idea of which one would work best for you before you try an MT5 download.
The Pros and Cons of Forex
One of the biggest benefits of forex trading for beginners is how simple it is to get started. Setting up a forex trading account will usually be much simpler than opening a trading one. You won’t have to worry about transaction fees and rules as much either.
Another great thing about the forex market is that it’s open 24/7, unlike the stock market. And the principle behind forex trading is usually easier to grasp for a lot of people since most people have participated in foreign exchange at some point in their lives.
One of the issues with the forex market, however, is that it’s so much more difficult to gauge momentum and time market movements, mainly because it’s open all the time and can be swayed by any international market. This is why you shouldn’t assume that you can just read the news and be able to capitalise on market movements. Making good money is almost impossible without using heavy leverage too, so this is something you’ll have to consider.
The Pros and Cons of Stocks
Stocks used to be intimidating for beginners, but they aren’t anymore with the advent of products like exchange-traded funds. Exchange-traded funds, or ETFs, allow you to invest in whole sectors of industry or follow specific indices. These won’t give you the highest returns in the world, but you could consistently beat inflation with little trading knowledge if you make the right decisions.
Getting started with stocks is not that complex either, though you might have to jump through more hoops to open an account. Once you have an account, all you have to do is download their trading platform and start practising.
If you don’t mind being glued to your screen most of the day so you can track the market movements and make a few pennies or pounds if you’re lucky per successful trade, then Forex trading is for you. Stocks, on the other hand, have more potential for fast profits, but fast losses too.
It’s a matter of how risk-averse you are and how fast you want profits. It’s also about variety. The forex market could get monotonous, but stocks offer so many different trading options. But that’s not important for everybody. So, you will have to look closer into both options and consider trying them both.
At the end of the day, only you can decide which trading option you should prioritise. The best you can do is gain expertise in both areas and do some practice trading so you can get a better idea of which one works best for you.