Forex vs. Stock Market; Which Market Prevails?
There are two fundamentally different markets in our world today. We are not talking about fish or vegetable markets; we are talking about the markets that are driving the world economy. These two markets are the Forex market and the stock market. What are the differences between the two markets and which one is more powerful and will eventually prevail over the other? We have conducted a study to find out exactly which market is the safest to trade with and which will in the end prevail.
The fundamental use of a stock market is to privately or publicly trade stocks of companies. This means that every company has collective shares that it brings to the stock market upon entering and these stocks and shares are subject to rises and falls caused by many different and possible factors. The Forex market on the other hand only trades currencies of different pairs and countries.
Both markets require brokers if the normal person who does not own shares wants to get involved in the trade. For the stock market you need a stock broker who sells and buys bonds, shares and stocks. In the Forex market you need a Forex broker who buys and sells certain amounts of one currency.
Trading with stocks can bring a lot of money because you have to speculate whether a stock or bond is going up or down and you have to buy or sell respectively. The downside to this kind of trade is that all stocks are subject to outside factors. These outside factors could be a reputation of a company for example. Let us take stock x from company x. Company x has recently occurred a scandal and the negative publicity decreased the demand for company x. This means that the stocks of company x will plummet and the company can even go bankrupt because a company gives its whole worth to the stock market.
This kind of scenario could never happen in the Forex market because the Forex market deals with currencies only and it does not affect individual firms and does not push a country into bankruptcy. The focus in Forex trading is simply to make money of a current low currency and when it rises you earned the money that you bought the currency for. When the dollar is low for example, you use 1,000 euro to buy dollar and you receive let us assume 1,200 for the euro in dollar. When the dollar rises to a higher exchange rate, you won additional money because when you exchange it back into euro, you have 2,000 instead of the invested 1,000.
Forex market trading is definitely the safer and more friendly way of trading on a market. The Forex market will definitely prevail without any damage to other companies.