There are many ways of trading legally, they are mainly on stocks called as equities, currencies known as forex and commodities. These are the main areas where one can trade and invest.
Equities are trading with shares of listed companies in one of the many stock exchanges that are available across the world. Commodity trading is trading with materials or goods like gold, silver etc. which is hard trading and the soft trading consists of agricultural products like wheat, sugar, rice etc. Forex trading is trading with the many currencies across the world US dollar and Euro dominate the market followed by local currencies across countries, British Pound and Japanese Yen are also popular.
Out of these equities are more popular as there are many stocks that are available on various stock exchanges across the world. There are many people who do research and provide an analysis and an analysis of when a stock would move and break a barrier. This is very easy for a common man to understand and trade.
Comparatively forex trading is on the lesser side as people think that it is only for experts and feel that there is no enough money to be made as dividend and stock split and bonus are absent. However, there are certainly certain advantages in trading in currency as compared to stocks. Let us see the advantages below
24 Hour trading:
The beauty of the world is that when it is night in one part of the world it is a day in some other part. Someone or other is ready to trade in currency at any point in time unless it is a global holiday. This type of round the clock trading is not possible in any of the share markets. All share markets mostly open from 9 AM to 5 PM or one or two hours ahead or later. They are never open for 24 hours. Thus one can even work in the morning and trade forex at night. Thus one can do it as part time job as well.
Low transaction cost:
Any transaction that you make or any trade you make and whether it ends in a profit or loss, you need to pay transaction fees. This fee is for the person who provides you the platform to trade and also includes taxes that have to be paid to the respective country where trade is done. This fee is relatively less for forex compared to what is charged for equities.
Better profit potential:
Equities usually follow the economic conditions and rise and fall as per conditions of the country. It depends on how the economy of a country is improving and also depends on the sector performance. All these risks though present for a currency can be ignored by the trader and he or she can look at trading in a totally different currency that is not related to his home country. One can make money in both rising and falling markets.
The trade volume of forex is much higher than any stock exchange in the world. Thus the liquidity is much superior and many major currencies are traded a lot here. The ability to trade for the whole twenty-four hours is also a factor contributing to this.Now that we have seen that forex trading is better than equities does. It means that by trading in forex, one can make more money
That cannot be said with any amount of certainty, a good trader will make money in both and a bad trader would lose money in both. The main aspects of making money on whatever trading one does are
Be disciplined: Do not just buy some stocks or currencies just because you feel like buying them. It has to be on a regular basis and there are also schemes where people buy systematically like a few shares every first day of the month. What this does is to average out the cost.
Do research: Either you do the research yourself or ensure you read and follow research done by experts. If you are reading other people’s research still you apply your logic to make a final call.
Don’t overreact: Selling when markets are falling and buying when everyone is buying will only make you lose money. Never try to time the market.
Thus one can excel well in forex trading