Forex Forecasting at Forex Trading Guide

Main Forex Forecasting sponsors

Forex Forecasting

Welcome to Forex Trading Guide

Article

Investing in FOREX or investing in Stocks? Understand the benefits and risks of each Market

Ofer Shoshani

So, you have the money to invest, but you don�t know whether to buy Stocks or try something new, like FOREX for example.

Stocks

Before we describe what are the benefits of FOREX, lets remember what are Stocks. Stocks have been a popular investment for hundreds of years. Companies issue stocks to raise capital for expansion and new projects, and each share of the stock represents a partial ownership in the company. Basically speaking, when you buy stocks you invest in the company and in the market it is working in.

Hence, when the company does well and makes a profit, the value of the stocks rise and you can sell your shares for a profit or hold on to the stock for even more gain in the future. Sometimes companies will issue dividends � part of the profits that are distributed to share holders, another way for you to make a profit.

Stocks are traded on Stock exchanges. Most stocks are bought and sold through brokers (agents) who charge a commission or fee for this service. American stock exchanges include the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ). Most stocks are only listed on one exchange, although large companies may have listings on several exchanges.

Stocks were traditionally seen as long-term investments. So-called 'blue chip' stocks - those having proven value over many years - may form the backbone of an investment portfolio. Short-term traders (Day traders) exist, but it is a relatively new phenomenon made possible with the advent of Internet trading. Day traders attempt to take advantage of large daily fluctuations in the market by buying and selling many times in one trading period. It is relatively risky and broker commissions charged on each transaction reduce any profits realized.

Stocks may sometimes be bought on Margin, meaning that the investor borrows money to buy the stocks. Margin rates are usually around 50% - the investor can borrow as much as half the value of the stock.

FOREX

The Foreign Exchange Market (FOREX) is quite different from the stock exchange. In contrast to the stock exchange, the FOREX is primarily a short-term market. Most traders enter and exit deals within a 24-hour period � sometimes within a few minutes. Many FOREX trades can be made in one day without building up a large brokerage fee because FOREX trades are commission free; hence, you keep all of your profit. Brokers earn money by setting a spread � the difference between asking and selling prices.

FOREX is the largest financial market in the world. It is handles transactions worth $1.5 trillion every day ($1,500,000,000,000). By comparison, all the American stock exchanges combined handle daily transactions worth about $100 billion ($100,000,000,000), 15 times smaller than FOREX. It is not located in any one location, but in the virtual space of the Internet. Trading markets are located world-wide and because of difference in time-zones trades can be made 24 hours a day, 5 days a week. Trading begins in Sydney, Australia on Monday morning (Sunday afternoon New York time) and continues non-stop until Friday afternoon New York time.

The huge volume of FOREX and its around the clock availability, means that it is one of the most liquid markets in the world. There is always a buyer and seller for any type of currency because the world economy relies on the movement of goods from country to country. Stock exchanges have more limited trading hours. While it is possible to trade on exchanges worldwide, each exchange is independent and operates for just 7 hours a day. There is no way to buy or sell a certain stock that is only traded on one stock exchange when that exchange is closed.

FOREX has even more advantages compares to Stocks: It is more predictable than stocks, it follows well established trends, it allows high leverage � typically 100:1 instead of 2:1 on the stock market; and it doesn't require a large investment � mini accounts as small as $250 can get you started in FOREX.

The big question is what is Best for you? Are you looking for a Day-Trading constant activity, with its advantages, or a long-term investment. Know the answer and you know the nature of your next investment.

More FOREX articles can be found at http://forex.beyogi.com - The Foreign Exchange Market Explained.

About the author:

Ofer Shoshani is the Editor of beyogi (http://forex.beyogi.com) - The Foreign Exchange Market Explained where many more articles like this one can be found.

Forex Forecasting News

forex forecasting

Go to the new RSS page and renew your subscription.]]>

IMPORTANT: Bing News RSS feed has moved!

The pair is trading along an sideways trading pattern. An downtrend will start as soon as the pair drops below support level 1.3095, which will be followed by moving down to support level 1.3030 and if it keeps on moving down below that level ...

Today's EUR/USD Forecast

The DailyFX research team has released the first two of our semi-annual forecasts for the most popular markets we follow. Each January, we provide detailed forecasts that describe where we expect the Euro, Oil, US Dollar, and Gold to be in 6 ...

DailyFX 2012 Forex Forecasts

FXstreet.com (Barcelona) - The kiwi has climbed as high as 0.8373 at the end of the Asian session, partly boosted by the RBA’s decision to leave the cash rate unchanged at 4.25% - widely against forecasts ... The Forex Market” All Rights Reserved.

Forex: NZD/USD in session lows

It seems that Japan’s government and central bank conducted 1 trillion yen ($13 billion) worth of unannounced forex intervention in early November, according report. Japan’s last public move into the forex markets was on Oct. 31, but the ...

USD/JPY Fundamental Analysis February 8 , 2012, Forecast

The BSE Sensex snapped a five-day rally on Tuesday as investors locked in profits after the government forecast growth may dip below 7 percent, the slowest pace since the 2008 financial crisis. Bharti Airtel (BRTI.NS), the country's largest ...

BSE Sensex Closes on a Bad Note after Govt’s Growth Forecast

At the same time, the Bloomberg survey of economists reported 23 out of 27 forecasts submitted were calling for a cut of the same magnitude. This consensus gives us a sense of the surprise quotient in the central bank’s official hold on the ...

Dollar Finds Relief in Dows Restraint after Friday’s Drive

The result compares with the median forecast in a Bloomberg News survey of 26 economists for a 0.2 percent gain. The report validates Reserve Bank of Australia Governor Steven's decision to lower the nation's benchmark interest rate by a quarter percentage ...

Aussie Retails Sales Falls

German industrial output posted its biggest fall in December since the depth of the financial crisis at the start of 2009, the Economy Ministry said on Tuesday, underperforming forecasts by a wide margin. Euro zone in graphics r.reuters.com ...

Euro scales 8-week peak vs dollar on Greece deal optimism

Peter: You and I agree that the dollar is on the road to ruin, and we both have made some drastic forecasts about what the government might do in the face of the dollar collapse. How might this scenario play out in your view? James: The dollar ...

Forex Trading Guide - Forex Forecasting Section

Forex Forecasting Navigation

2005 Best Seller!

Best Forex Forecasting products