Before answering the question posed in the title of the article, let’s briefly go over the theory.
What is the Forex market and what is the stock exchange?
The Forex market (from the ANL. FOREX – Foreign Exchange ) is an international market where the exchange of state currencies is carried out one for another. The main players in this market are the so-called. market makers, to which it is customary to include large banks (including central banks of countries), multinational companies, investment funds, etc. Interbank FOREX should not be confused with the similarity used by ordinary private traders.
The stock exchange is an organized trading platform for concluding transactions with such financial instruments as: stocks, bonds, shares of exchange-traded investment funds, etc. In addition, it presents such derivative financial instruments (derivatives) as futures (including foreign exchange) and options.
Exchange vs FOREX: Main differences On the exchange, trading is carried out through a broker, and on Forex, through a dealer. The broker earns exclusively on commissions and is simply an intermediary, and the dealer acts as a counterparty for all transactions concluded by his clients, and therefore, theoretically, his earnings are the losses of clients (although officially the dealer earns from the spread).
The work of stock brokers is strictly controlled, while the activities of Forex dealers, although officially and within the framework of the law, are not yet regulated effectively enough. This, to a greater extent, is the reason that a huge number of Forex dealers abuse their position and profit from clients.
Read more about this here:Caution! Forex dealers In order to start more or less fully trading on the exchange, an initial capital of the order of several hundred thousand rubles is required.
A smaller amount simply will not allow you to create a relatively diversified investment portfolio, and therefore there can be no talk of any serious trading with it. Forex dealers, in this regard, offer much more loyal conditions. Firstly, due to their huge leverage, you can start trading with a couple of hundred dollars. And secondly, many of them provide their clients with the opportunity to trade on so-called micro-accounts. On a micro-account, a deposit of even $ 10 allows you to conduct full-fledged trading simultaneously with a large number of currency pairs (thereby ensuring proper diversification).
So, what do we have in the end.
If you just want to try yourself as a trader and do not want to invest a lot of capital in trading, then you can well start with the Forex market (just register with reliable dealers certified by the Central Bank of the your residense country). And if your goal is serious work, you intend to invest substantial capital in trading and want to be absolutely sure of the reliability of your intermediary (broker), then you have a direct path to the stock exchange. In any case, no matter what you decide, you should understand that trading is far from a game, but serious work to achieve success in which, you need to make quite certain efforts. And taking this fortress with a swoop is unlikely to succeed.New to Forex?Click here to learn how to succeed!