The Forex/ Stock Debate: Is Trading Forex or Trading Stock Better?

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An increasingly hot topic for traders recently has been the forex market.

There is a school of thought that says that the forex market is the most more condusive market for traders, with the Financial Crisis being cited as a great example of how when stocks and commodities tanks, the currency markets continued to play out their major trends.

Although the forex or foreign exchange market has been getting a lot of attention lately, but it is still a mystifying and frightening place to contemplate trading for many beginners.

To find out more about forex, why forex trading is considered by some to be superior to stock trading, and what tools are available, EconomyWatch.com caught up with expert forex trader and eToro Manager Jeff Hardy. eToro are the largest online forex trading platform provider, managing the Webtrader online forex trading platform and providing tools such as rates & calendar widgets and training videos, some of which you can find at the end of this article.

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EconomyWatch.com: Welcome Jeff, thanks for taking time to talk to us. What are the advantages to trade forex compared to stocks or bonds?

It’s good to be here, thanks for having me. The Forex market is open round the clock, has no commissions and the leverages are significantly higher. This means you can make more profits with less invested, but of course you can also lose more if you don’t prepare properly. That is why we emphasise education for beginners. Most importantly, there is no such thing as a down, bear or unprofitable foreign exchange market. In forex, currencies are traded against each other and the profit is made on the changes in their relative value, so whether a currency is going up or down there’s profit to be made, depending on which side you are trading.

EconomyWatch.com: How do you analyze the forex market?

The most accurate market analysis strategy is technical analysis. Using line or candlestick charts you can predict the way a currency’s price is going to move based on its past behavior. This is the strategy used by most professional traders. Fundamental analysis is more useful for long term trends, and is usually related to the relative strengths of countries economies, and their respective interest rates.

EconomyWatch.com: How has the forex market changed and developed recently?

The past two years have been crucial for the massive growth of the forex market. It has been a massive change. Three years ago forex trading was strictly professional, a highly restrictive field. It has now entered the mainstream, thanks to forex platforms such as ours offering beginners the chance to get an easy start in the market.

In the past six months things have gone up a notch or two. As an aftermath of the Financial Crisis and the massive loss of wealth in stocks, funds and other asset classes, investors from all other markets started flooding the forex market. It is large enough to generate high returns on their capital regardless of conditions. The market is larger than ever – $3 trillion is traded daily, yes daily – and yet it is still growing.

EconomyWatch.com: Are there scams in the Forex market, and how should one guard against them?

There are always scams out there by people looking to make a quick buck. Potential traders should check if the broker or trading platform provider is licensed, and read the content of their site or call their support line and ask a few questions. The National Futures Authority regulates the forex market and gives out licenses in the U.S. You can always trust a company that has this license so check for that first.

EconomyWatch.com: What tips can you give to a “forex beginner”?

Education, education, education! There are many free forex eBooks, tutorials and video guides, such as those on eToro.com. Use the demo mode to practice even after you’ve started trading. Also conservatively manage your money. Never invest more than 5% of your margin in one trade. On eToro we recommend using the Top Traders’ Insight tool to see what our top 100 traders are doing. They almost always out-perform the market.

EconomyWatch.com: Can you tell us a bit more about eToro?

The eToro Forex trading platform has something to offer to anyone who is looking at Forex trading, but I would say that novice traders would appreciate it in particular thanks to the visual interface and supporting educational material. Advanced traders meanwhile make a lot of use of the community and social features.

EconomyWatch.com: Why should a trader choose your company compared to the other companies?

We offer an award-winning platform with unique visualisation software, tight spreads to reduce trader costs, and a wide range of leverage options. eToro is just much more simple and could even make the trading fun.

EconomyWatch.com: Where do you see your company in 2 years from now?

We are currently the number one forex provider online according to Alexa.com and other traffic measurement services. We are also adding commodity trading and micro-lots over the next few months so we expect to keep growing both our forex services, and to bring our revolutionary platform to bear on other asset classes.

EconomyWatch.com: Thank you for taking time to talk to us Jeff.