In this article, you will learn the biggest difference between the stock market and foreign exchange.
1- Leverage: In leveraged stocks, leverage is usually 2:1, which means that if you have $ 2.000 in your trading account, you can buy up to $ 4,000 in stocks. If your account exceeds $25,000, then it can be considered a day trading account, in which case your maximum leverage may be limited to 4:1 for day trading. In terms of foreign exchange, the maximum leverage is usually as high as 200:1. This means that there are $2.000 in your Forex account and you can buy up to $400,000 in your favorite currency pair. Some brokers offer higher leverage, reaching 400:1!
2 - Variety: There are more than 10,000 stocks in the U.S. stock market alone. This means that you have a lot of trading opportunities, but it's also complicated to find the stocks you should trade. In the foreign exchange market, there are only 4 major currency pairs: EUR / USD, GBP / USD, USD / JPY and USD / CHF.
3. Commission fees: When stocks trade stocks, you usually pay commissions. The commission can be based on the number of shares you buy, or it can be a fixed commission, for example, an unlimited number of shares is $10. In foreign exchange, the agreement is free. You will not pay any commission by buying or selling currency. The only cost is the spread.
4 - Schedule: The US stock market is open Monday to Friday from 9:30 am Eastern Time to 4 pm Eastern Time. The foreign exchange market is open 24 hours a day from Monday to Friday. This brings unlimited opportunities to traders around the world.
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Orignal From: Forex and Stocks
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