Difference between Stock Trading and Forex Trading

Traders are always faced with the question, stocks or currencies, which market is better? While the stock market and the foreign exchange market are two completely different entities, they are both lucrative, and just as risky. Starting off trading, beginners will find it confusing to pick between stocks and currencies, and these perplexed traders fuelled by internet myths will take a big fall ultimately! Shares and currencies are no rocket-science theories that need sleepless nights of studying; with enough research, any trade can be bettered at.
 

Here are the major differences between stocks and trades:
 

Stock Trading vs Forex Trading

 

1) Trading Spots: Equities are traded at stock exchange markets. These places exist solely to facilitate trades since they're a long and arduous process which needs clear and accurate data. One predominant example is the NYSE (New York Stock Exchange); trading at exchanges has an amazing advantage - traders can keep a track of buys/sells using order books. Currencies, on the other hand, are traded over the counter. Forex is a private deal between the buyer and the seller. These transactions are accompanied by several risks like broker fraud, counterparty default etc.
 

2) Entry Fees: This factor plays a huge role in luring in traders into the Forex trading market. Stock trading needs a huge investment capital. This makes Forex the better choice for several traders. However, the foreign exchange market is a leveraged ecosystem. This can be a boon or a bane, depending on how good the trader is! With leverage, you can invest much more than just your trading capital value. However, this also increases risks; when a leveraged trade is lost, investment capital and the leveraged amount, both are incurred by the trader!
 

3) Lesser Spread Costs: The spreads are lesser in Forex when compared to stocks! Trending currencies like USD, EUR, JPY, GBP etc., have tight spreads. However, when you're considering long-run investments, Forex won't charge as much as equities. Stock trading, on the other hand, is a pricey process. Similar to currencies, premium stocks often have higher spreads.
 

4) Varying Mechanisms: Forex is primarily meant for speculation, and stocks are meant to be invested in. Speculating in currency markets is cheaper when compared to the share market. Traders can speculate stocks, but the capital needed for it is huge, making the entire process very risky. Predominantly, the stock market serves as investments.
 

Stocks and Forex, both offer immense profits when traded smartly. At the same time, the risks are immense. Forex trading relies on leverages, meaning losing is not an option! It doesn't have to be, with the world's best Forex broker by your side; you can win all your trades! Call WesternFX. With the assistance of our stellar brokers, you will see trading success in no time.

Which Stock Market Trading Style Suits You The Best?

Each trader has a unique style to function with, in the stock market. Some develop strategies for day-trading, some have long-term trading style. The diversity of this ecosystem is what makes it amazing! The most predominant attribute you will see between each style is the duration; leaving behind which not too many changes. 

Here are 3 amazing stock market trading styles for you to choose from:

1)Scalping: Scalping is a fast-paced trading style. The trades occur in a minute’s difference. Scalping is a method by which active users can implement since it is best suited for them. Scalping like most other styles requires a lot of concentration to work with, more so because the market fluctuates at a minute’s notice! If you are a person with eyes glued to the charts and finger on the trigger, scalping might be perfect for you.

Stock Market

2)Day Trading: Preferred by many, day trading is the perfect style for those who close the shutter by the end of a day. Day trading starts and ends within a day. People who can’t handle long-term trades and trades that have hour-long fluctuation activities are the ones who make the best day traders.

3)Swing Trading: Speculating on a particular trend’s swing in the market is called swing trading. Swing trading is the median between short and long-term trading. It isn’t too short, or too long. However, for those who can’t handle the overnight suspense, swing trading might not swing the right ways for you. It is best suited for the more patient traders and the ones who have impeccable ability to pinpoint a commodity’s rise/drop in the market.

Stock market trading is a versatile environment and what keep the entire ballroom in place are these plans. Without the ability to gauge a trade, your inclination towards it and the output, succeeding in stock market trading is tough! 

At WesternFX we offer the best online trading services. From Forex to stock markets, brokerage to consultancy, we cater to all! For availing the best online trading services in the Philippines, call us today!

Stock trading Vs. CFD trading: What shows greater promise in 2017?

Considered Asia’s leading emerging market, Philippines has recorded staggering growth in recent times and a remarkable increase in trading activity.  From stocks, bonds, currencies to indices, the spurt of growth is evident across all financial markets. With investments being made easier through the introduction of online trading; stock trading and CFD trading have witnessed substantial growth and have reached a peak in 2017. Those looking to take their first step into trading, are caught in a dilemma when it comes to choosing between the two.

So, what’s the better option and why? Let’s find out the answer to that very question by highlighting the advantages and disadvantages of trading in stocks and CFDs:

CFD TRADING OVER STOCK TRADING:

THE GOOD:

Commissions:

The brokerage commissions on CFD trading in Philippines tend to be very low, making it a popular choice amongst traders, who want to retain a good cut of their profits. While earlier, stock brokers charged higher brokerage, the increase in competition has prompted several brokers to lower it. In 2017, both online trading options gain the edge with low trading commissions.

Leverage:

If there’s one reason why you need to pick CFDs over the other, it has to be leverage. Instead of buying ten stocks for 1000 PHP, you can instead invest the same in five contracts, controlling 500 shares with the same sum. That’s leverage – and to those who use it wisely, it promises massive profits.

Diversity:

As opposed to the stock market, CFDs allow traders to choose from over 10,000 instruments to trade, from currencies to commodities to oil. Diversifying the portfolio enables traders to maintain a balance because a loss in one tends to get compensated by a profit in another.

Short trades

A stock trader can make a profit only if the price of the share goes up. However, CFD traders can make profits either way, i.e. they can go short and make money even if the price goes down, giving them greater control over their positions.

Trade duration:

Since traders might have to wait for long durations to wait for the price of the stock to rise and make a sell, the duration is quite lengthy. CFD trading, on the other hand, allows traders to profit from small fluctuations. In fact, in the Forex trading platform, scalpers open and close positions within minutes.

THE BAD:

• Trading too many instruments and making too many trades, may complicate things for a beginner in the field.
• Leverage can have an adverse outcome and amplify losses in CFD trading.
• A CFD investor in stocks has no rights as a share holder since there is no ownership of the asset involved.
• Holding positions in CFDs for extended periods invites overnight financing charges since the underlying asset is being ‘borrowed.' Buying shares directly is devoid of such charges.
• CFDs are over-the-counter, and you cannot transfer your position to a different broker or provider. You’ll have to deal with the same broker the position was opened with.

The verdict: Weighing the pros and cons of each, it’s safe to say, that neither wins nor loses in 2017. Each has its drawbacks and advantages over the other. If you want to trade shorter time frames, then CFDs are for you. However, if the leverage aspect worries you, you can still trade with zero leverage. WesternFX is the leading Forex brokers in the Philippines that offers flexible leverage. You can start with zero leverage or even go as high as 1:500. If you’re still confused, talk to the experts at WesternFX before opening an account with them.