As compared to stocks, trading on forex at cfd trading South Africa tends to have more advantages one being that you don’t have to go over a list of over 7000 stocks that are listed to find out which company you should confidently invest in.
When it comes to forex, there are several currency pairs which are readily available, with the major most traded pairs coming down to about 4. Instead of having to own a piece of the company with the stock shares and worrying about the ability of the company to make some money, you will need to keep an eye on the currency movement and catch the trends which are profitable of the market.
The following are the differences that you will encounter between forex and stock:
24 hour market
During the week, both the stock and forex markets are readily available for trading. But one of the exciting advantages of forex is that, the forex broker will allow you in trading during the Asia, US, and European market hours, customizing your own style of trading.
While it is possible to trade in the EUR/USD pairs, even when the Americans and European centers close, during like an Asian session, it is not possible buying stocks from an Italian company which is listed in Italy stock exchange and not available in the Japanese stock exchange.
For it to work, stock limits you to the hours of the exchange, while for forex trading, you are given an access to the market for 6 days in a week, 24 hours a day as there is no exchange which is centralized. That way, you get your complete freedom of either getting out or in of the positions of the currency.
When it comes to the forex market order, they get processed instantly under the condition that you see the price that you will get after executing the order.
Stocks are able to allow you trading in leverage of 2:1. Even with that, you will need to fill a lot of amount of applications, getting approval. When it comes to forex, the leverage is normally at 1:500 and there are some brokers that have it even higher. It is available to you from the beginning when you open your account. When you have high leverage, there tend to be possibilities which are endless for making high profit with investment of minimum capital.
Various characteristics that are fundamental get analyzed whenever handling forex versus stock. When it comes to stock, when you purchase a share for example, for a certain company, you tend to focus on whether the stock of the selected company becomes more valuable or will remain stable.
With forex, whether selling or buying, you need to consider factors which affect the countries of the currencies that are involved, the GDP, unemployment data, political issues, consumer growth, and other things which are influencing the currency value. That means that, forex tend to have more advantages to the trader than the stocks.