Due to the ongoing global economic crisis, securing a steady income source has become very hard. People are suffering to make a decent living out trading even after getting a decent degree from the tier universities in the world. Though things might seem easy at the initial stage if you look at the market dynamics, you will realize, the importance of education is undeniable. People usually start taking trades in the currency market. Soon they shift to the stock trading business because they think it is the best way to make some serious profit. Though the stock and currency market has some distinct features, today we are going to learn the key difference.
Short term vs. long term investment
Stock trading is known to be a long term investment. If you are trying to scalp the stock market, you are making a big mistake. The insane spread is going to cost you heavily. It is very hard to select the major stock that you will allow you the perfect stock trading experience. Though it is a very simple task you can learn the details by working hard on your trading skills. On the other hand, if you analyze the currency market you can become a short time frame trader. The majority of scalpers use the currency market to execute the trade. Based on your trading method and mentality, you need to determine which type of market you are going to trade.
Quality of the broker
You can indeed trade the currency market with the average class broker. But when it comes to stock trading, you must check out the top brokers like Saxo. Having easy access to the online stock market is not enough to secure your profit. You have to learn the perfect way to manage the risk exposure and take the trade with a robust platform. Most importantly, you need to select the asset from the diversified trading instrument and it will help you to make some serious profit from this market. Once you become good at analyzing market dynamics, you can become a professional trader without having any trouble. Make sure you choose a good broker or else you should not try to trade the stock market.
Leverage
The currency traders usually get access to the high leverage account. But if you trade the stock market, you are not going to get such a high leverage trading account. The maximum leverage you might get is 1:10 or anything around these numbers. So, in stock trading, you need high investment. But remember the fact that a low leverage trading account is crucial to your success. If you intend to use a high leverage trading account, you might lose a significant portion of your capital. Stick to a low leverage environment whether you are trading the stock or the currency market. Once you ensure the safety of your capital, you can make some big profit from this market.
Market condition
The currency market is much more volatile than the stock market. Usually, the currency traders are aggressive and they can deal with the market volatility with a high level of precision. On the other hand, the stock traders are conservative and they don’t like the fact that insane volatility offers huge profit-taking opportunity. Does that mean, the currency traders are smarter? Well, it depends on how well they manage the risk. It is safe to assume the stock traders are better at managing the risk because they don’t use high leverage account too often.
Before you take the trade, always asses the state of the market. If the market is too much volatile, don’t take the trade. Taking trades in the complicated and volatile market condition might make you frustrated and thus you will lose confidence while taking real trades.
