Business & Investment

Why Trade Forex: Forex vs. Stocks

One of the issues people face when they first get into trading and investments is picking which market they want to focus on. There are so many different markets that are readily available and they all offer different pros and cons, that it quickly becomes overwhelming having to make a decision.

For example, investing in stocks is very different from trading forex, and trading cryptocurrencies is very different from trading stocks.

In an attempt to straighten things out and help you guys make a decision that suits you and your expectations, we asked some trading experts to compare stocks with forex and we summarized the results in the following post.

Read Also: 10 Functions Of The Nigerian Stock Exchange

Forex Trading

The foreign exchange market is the biggest financial market in the world based on daily turnover. In fact, with a daily volume exceeding 6.6 trillion dollars per day, no market in the world could even dream of competing with the forex market.

With that said, the lion part of all forex trading is done on an international level with nations trading with each other to stabilize their currencies. However, a substantial part of that volume can be contributed to retail traders.

Read Also: Forex Trading in Nigeria – How to Start and Succeed Beyond Your Wildest Expectations!

Now, the main benefit of trading forex as a retail trader is that the market is made for trading, unlike stocks that are better suited for long-term investments, but more about that in a second. In turn, that means that all trading-related forex guides are focused on trading and not investments.

Moreover, there is a huge range of tradable currencies and currency pairs that you’re most likely already familiar with, such as the NGN, USD, GBP, EUR, etc. and it’s always good to trade assets that you already understand.

Secondly, there is an ever-growing number of amazing online forex brokers available on the Nigerian market, making it easy to find a trustworthy service to use. To see the top brokers in Nigeria, check this post out: https://bullmarketz.com/best-stock-forex-brokers-nigeria/

Stock Trading

Unlike the foreign exchange market, the stock market is much better suited for investments, especially for beginners. The reason for this is that currencies fluctuate a lot on a short-term basis, but not so much on a long-term basis. Stocks, on the other hand, doesn’t fluctuate so much from day to day but have the potential to grow substantially over several years in a row.

Just compare how stable the USD has been since the late 90s compared to Amazon’s stock which has grown astronomically in the same time period.

Read Also: 15 Best Technical Indicators for Stock Trading

Another reason, which we’ve already mentioned, is that many stock guides online are written for long-term investments and not trading, making it more difficult to learn the skills needed to become an efficient stock trader.

That is the reason as to why forex is better suited for trading than stocks.

Combining Different Markets

With all that said, there is no reason for you to completely ignore stocks. In fact, stocks are great instruments to use in combination with other forms of trading.

Let’s say you’ve listened to our advice and decided that you’re going to start trading forex. That’s great and we wish you all the best. Just don’t forget that nothing is stopping you from trading forex and investing in stocks with long-term goals at the same time. Some might even argue and say that it’s advisable to combine the two methods.

Read Also: Learning to Trade on the Forex Market

Furthermore, all of the top forex brokers in Nigeria and internationally, offer a combination of currency pairs and other assets, meaning you can use the same broker and the same trading account to trade forex, stocks, commodities, cryptocurrencies, and more.

All things considered, it’s up to you to decide whether or not you would like to trade stocks in addition to forex. Just keep in mind that it can be easier to master forex trading first and then translate the skills you’ve mastered to stock trading as well.

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Ifiokobong Ibanga

Ifiokobong Ibanga is the founder of InfoGuideNIgeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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