Forex Vs Stocks

[ssblack]

Stocks are too easily influenced by the analyst clowns on CNBC. At least with FX or Futures, you are less likely to get hammered because if a large event comes out, you'll want to go in that direction anyway. But a stock can get whacked when the Dow is up 150 points because of a downgrade, and that stuff is not worth the time when you can be trading "the market" itself.


scott

[TRYFX]

Also of note....In order to diversify against rising and falling interest rates, investors balance their portfolio's through holding a range of currencies. Through forex trading you can control 100's of k's of dollars worth of currencies up to
50x more leverage than with stocks.

No short selling restriction as compared to the stock market, and no insider information problems to deal with. And typically rate changes are anticipated after the regularly scheduled meetings of central banks, also with 3 indicators to look fo GDP, CPI and PPI all influencing international trade ratios.

[echelon4x]

I've traded stocks a lot in the past both large and small co's through trading on a broker account t+10, t+20 etc. and via CFD's. I still have some as longer term investments, though steer well clear of them now for trading because they can be very unpredictable in comparison to FX trading.

For techincal analysts the FX market is a dream come true - for anyone else it can be a nightmare. If you don't pay attention to and understand global economics in depth and keep up with the news, then you're likely to come a cropper if you try to trade with scant knowledge of fundamentals.

You can get by in stocks and make a lot of money with the flimsiest of fundamental knowledge - particularly if you catch wind of it before anyone else. For technical analysts, stocks can be nightmare because sudden news (which nobody caught wind of - e.g. board level scandal, major contracts won/lost, lower/higher than average sales etc.) can throw out the most perfectly drawn out fib retracement levels, pivot points, head and shoulders formations etc.

You can make a lot of money trading smaller companies in stocks though need to be very careful of broker spreads and liquidity and liquidity is something which has never been a problem in the FX markets. Of course smaller companies have more risk, so you typically get one huge winner and a few small losses.

Horses for courses I would say - if your trading skills lean towards TA then go for Forex, if your skills lean to Fundies go for stocks. TA can be used for stocks, though it's wisest to stick with the blue chips which move in predictable cycles - some are ridiculously predictable and move depending on whether the sector they're in is "in vogue" at the current time or not - however it can be a slow process and you may find it trickier to get the sort of leverage that you can get in Forex.

[mrbrint]

Forex is great, stocks are great. Ive traded stocks for 8 years and thats what pays my bills. No one market is necissarily better. I mean I own a basket of stocks and no one stock has yet to kill me in the last 4 years. Forex is great, but it carries a lot more risk. If your worried about a stock moving 50% against you in a day well then you need to diversify because these things do happen. I wouldn't reccomend forex to any of my clients as slow and steady growth makes a lot more sense in the bigger picture.

[dracula's son]

Originally Posted by buff

Then I heard about Forex and thought all my dreams had come true. I noticed all the good stuff like 24hr market (no gaps), huge liquidity, fewer markets to follow (4 majors) and nice trending markets with huge ranges where you can trade off 5 min or daily charts etc etc etc. All looks good and appears to be the perfect market. Traded this for a couple of years part time and then gave it a go for a year fulltime. I can tell you, I learnt plenty about myself in that year and I also found Forex a lot harder to trade than it appears. I am now back at work (to reduce my wife's stress levels) and I am still trading Forex part time.

.

I agree with you completely

[forexmaveric]

Any form of leveraged trading can lead to incredible losses!!! Yes ...thats right, losses!! Its amazing to me that everyone gets so excited about enourmous leverage, and the beauty of forex vs anything. Ive been a broker for a while and everyone I have seen trade forex has had there asses handed to them .

Wow, spot forex is so volatile that I don't even recommend it to new clients anymore. I had a guy who started with our firm about 5 to 6 months ago. He opened a spot forex account for self trade. He started with $90,000 USD. He lost $70,000 with only 2 positions in about a week. This happend during the infamous Thursday of the chinese yuan-revaluation last year. That day saw moves in the yen of about 200 to 300 pips in a matter of seconds. Ofcourse he was on the wrong side. This guy is a computer programmer and mechanical technician...and he was crushed.

His technical trend program was obliterated in seconds, as a trend can change at any given moment. It only takes a bank, central bank or hedge fund with billions of dollars to move things around, and technical charts can be turned upside down in a blink of an eye.

He was slipped over 150 pips on each trade. Yes...any firm that says they guarantee slippage is full of it. Forex firms will only guarantee slippage in a normal market....not fast markets. "Read the fine print."

Stocks..."unleveraged" is the only way I can see anyone make money relatively safely. And even then companies go bust, and you could still lose all your money. The only problem with unleveraged stock ownership is that in order to make money you have to be extremely patient and be willing to wait at least 30 years for any real capital appreciation. Stocks are generally biased to the upside historically as economies grow, generally stocks will reflect this in long periods of time.

Unfortunately, most people can't wait that long to become wealthy and they begin to look for the short cut in life...low an behold...leveraged goods. In any form of leveraged trading most participants will lose all their dough. About 95% to be exact. So who is the mysterious 5% winners????= The big banks, hedge funds , Wall Street big wigs, and the great firms of Western Europe get the lions share.

Anytime you play against these guys its like playing in a poker game were the players have billions of dollars of capital to play with and you only show up to the table with a puny 10 grand or even a hundred grand.
So in the long run...who do think will get to play the longest and win???? Think about it.

Thats the real world of trading ladies and gentelmen.

P.S. Sometimes even the top of the trading food-chain get obliterated...hint hint; "Long Term Capital Management, Refco, Barrings Bank."

Sound familiar???

[lamode]

Originally Posted by echelon4x

.
For techincal analysts the FX market is a dream come true - for anyone else it can be a nightmare. If you don't pay attention to and understand global economics in depth and keep up with the news, then you're likely to come a cropper if you try to trade with scant knowledge of fundamentals.


...if your trading skills lean towards TA then go for Forex, if your skills lean to Fundies go for stocks. ...

i never trade stock, but i do find that forex does follow TA quite often, especially support and resistance levels.

[ezekiel]

I agree with lamode ... because 80-90% of spot FX involves the 6 or so majors, that provides deep liquidity. Think of the intense focus and concentration of everyone trading FX on basically just 6 pairs?? This is one of the reasons Forex greatly adheres to technical levels. Not to mention leverage, 24hour market, and no comissions.

Ezekiel