FAQ Which Should I trade - Stocks, Futures or Forex etc.?

[timsk]

. . .There is a fairly limited amount of stock available, and you only have to really be bothered about the company’s ability to turn over a profit. When you are trading Forex (currencies) you have to bear in mind that a country’s currency can and will fluctuate, this makes the whole thing far more complex than only having to consider whether a company is going to make much money in that particular quarter. . .

Hi yellowfloyd,
Reading between the lines of your post, the inference is that if you think a company will make a profit over the next quarter, go long the stock and, if you think it's going to make a loss, then you either step aside or short the stock. Is this correct - did you really mean to infer that?
Tim..

 

[yellowfloyd]

Hi yellowfloyd,
Reading between the lines of your post, the inference is that if you think a company will make a profit over the next quarter, go long the stock and, if you think it's going to make a loss, then you either step aside or short the stock. Is this correct - did you really mean to infer that?
Tim..

Hi Tim,

Basically, yes. I think it’s all about the underlying company rather than price. I believe what I’m buying/selling is tangible.

The FX markets are too quick for me – I need to feel more comfortable with my trading before I embark on that!

 

[MRDW]

Currencies are driven by long-term macro-economic forces and therefore trend.
Stocks prices and driven by speculators speculating and therefore revert to their means frequently.

Trading trends is hardest.

 

[josch]

Good question - and the most probably useful already was counted by T2W Bots's post #2.

Most are comparing wrong market details. If I'm reading

- forex trading is simple / easy
- you can use leverage and others ...

those are the largest misunderstandings of forex beginners. All free without costs, free trading, free teaching, leverage up to 1:400, not to forget free trading platform, i.e. MetaTrader 4 or 5, those are the well-known marketing arguments of your best friends (the brokers).

Most is wrong: you pay commission, if not, it's included in spread, you use leverage, do you know what it is? Leverage 1:400 means not only you trade 100.000 USD with 250 USD, if you win 25 PIPs, you double your margin, on the other side, if you lose 25 PIPs, you lost 100%.

Forex Trading PROs

- the markets are open 24 hours 5 days, nonetheless there are different times to trade
Frankfurt/London, overlapping with New York means large volume and smooth executions,
Asian session (Singapore, Tokyo) means smaller volume concentrating on JPY and AUD crosses.

- trading fractions of a standard contract (lot) means excellent possibility of money management
even with small accounts.

- Forex trading still is a hype, if you know, how to manage it, you may benefit from this.

Forex Trading CONs

- nearly everyone tells AND shows you, how easy it is - it is not!

- some brokers making a lot of efforts to get you to a long trading-career,
because they earn and live from your commission. A lot of brokers play
other games to get your money faster than only via commissions.

- all is online for free, it's so much, you'll have a problem to select the right sources.

- if you start trading after all (building strategy, trading plan, money management,
using STEM (signal, trigger, exec, manage), you probably get a new knowledge
of your personal mind - it seems whispering you to act contrary to your plan.

Below the line, I think, trading currencies is a good market to put money on the table. If you're acting wrong, you'll lose money in each market, sometimes very slow, sometimes faster. And Forex is the largest and fastest market.

The simplest headline, but hardest to implement, is "Plan your trade and trade your plan". Copyright by I don't remember, you may hear this possibly before, but it's really true. In other words - getting a (forex) trader is starting as trainee. So practise, practise, practise and be disciplined, disciplined, discipleaned (did I mention discipline?).

What you have to invest is time, a lot of time. The environment (demo trading platform, strategies in forums (some working good) and helping seniors will help you as long as you don't think, that you get a quick-rich system by buying a trading-robot from the 'veteran trader, offering only 100 copies of his never losing system for only 99 USD and only the next 3 days'.

 

[timsk]

Basically, yes. I think it’s all about the underlying company rather than price. I believe what I’m buying/selling is tangible.

Hi yellowfloyd,
If you can make this work for you - good on you. However, it flies in the face of conventional T2W wisdom on a number of fronts. That's not necessarily cause for concern, indeed, some might say it's a good thing!


Firstly, earnings for the forthcoming quarter can be calculated using fundamental data which, obviously, is what analysts do to come up with their buy and sell recommendations. Sure, there are surprises, but these tend to be in the form of how much a company underperforms or outperforms the consensus view - as opposed to whether or not it makes a profit or loss.

Secondly, very few companies can withstand the prevailing sector performance and general market sentiment. So, a very strong company with great cash flow, no debt and a full order book can be held back or, even, dragged down by a sector that's struggling. Conversely, a weak company can be artificially buoyed up by a very bullish market that's rising sharply because of geo-political events that have nothing to do with the individual company itself.

On this basis, most T2W members would argue that fundamental analysis is a poor gauge of short term stock price movement. Like I say, if it works for you - then great. Perhaps you'd care to start a thread in the Stocks forum to expand upon your ideas and how you use them to make your trades?
Tim.

 

[gregkevin]

The style of trading employed, financial resources, location and what time of day a person trades (or wants to trade), can all play a role in which markets will be best suited to the individual. Since some of these markets may not be familiar we will look at two common trader groups and how they could implement the use of other markets to improve their trading. It is important to be aware of such alternatives, as they may provide for some fine tuning which can result in better results over the long run.

 

[lawrence-lugar]

This was written originally in April 2008...I miss those magical days...of the 2008 and 2009 crazy market crash. Everyday would seem like it would have wild swings.

 

[NVP]

Hi yellowfloyd,
Reading between the lines of your post, the inference is that if you think a company will make a profit over the next quarter, go long the stock and, if you think it's going to make a loss, then you either step aside or short the stock. Is this correct - did you really mean to infer that?
Tim..

totally agree .......but its all about the catalyst / event that reveals this potential to the rest of the market and elevates / dumps the price accordingly

that's the secret ........being just ahead of the crowd

N

 

[arigoldman]

Focusing on one or two is one thing every novice trader should do. Hands down.

 

[victoriajensen]

One should trade, I think, whatever they are comfortable with trading the most. It really depends on the person and their preferences and habits, so I don't think one is better than the other.

 

[Jingles]

I like trading futures because I can go short just as easy as long. and I get plenty of mojo leverage. So when I put on a trade I go for the big bucks. win or lose. big bucks.

too boring to trade for small change. to me everything less than thousands of dollars is small change and not counted. at least in trading.

I think maybe I need a shrink to straighten out my brain. there seems to be a mistake in the way my brain functions.

 

[thinkpad954]

I prefer Forex. But I must suggest you take the time to actually learn the market before jumping in. Learning Forex trading іѕ аbоut learning how currencies аrе exchanged аnd іt requires аn іn-depth knowledge оf economic developments іn thе international markets аѕ wеll аѕ domestic markets

 

[alan5616]

I prefer Forex. But I must suggest you take the time to actually learn the market before jumping in. Learning Forex trading іѕ аbоut learning how currencies аrе exchanged аnd іt requires аn іn-depth knowledge оf economic developments іn thе international markets аѕ wеll аѕ domestic markets

One of the most important factors, when trading forex, is the time frame which you use to make your trades. The scalper running a 1 min chart is assessing the market on a different basis to the trader working off the Daily chart. They might both be successful but, for different reasons.

There are those that think the spot forex market is manipulated by the large financial institutions but, I couldn't possibly comment

 

[DT5]

Forex is fast and suits the adrenaline junkies more

 

[aa9]

i prefer forex and crypto, started with forex though, so if you are a beginner, try and start with forex only.

 

[Daniel Jones]

I prefer to trade forex. This market is larger than both the other markets and the scope of earnings is also higher. Yes, there is a lot of risk attached, but I can trade out of 24 hours a day and the liquidity levels are also way high. So yes, forex is my pick.

 

[Jingles]

everything depends on the trader. if you are the trader than you should be answering the question for you. anyone who needs other people to tell them what to trade is NOT READY TO TRADE.

 

[Richard Salime]

The situation is now difficult with the appearance of the virus, I think it is time that you investigate well and decide to negotiate in the most convenient

 

[Cantafford]

Hello,

Total beginner here. As in I know as much about trading/investing/money as the chair you are sitting on. Probably less.
Question: I've been buying crypto in the last months so I have read about them a little bit. I am of course in the reasearch phase I'm reading a lot and I'm a long way from starting to actually trade but I was wondering what is your opinion in trading with cryptocurrencies? Yes I know that I should be confortable with it, understand what drives them, etc I just wanted to know what other think of them as much as trading opportunities go . Thanks

 

[marcela 2020]

With what you feel better, some people are better in actions, others in the future and others in actions. You can take time to research each one and thereby determine what is best for you.