You want to invest your savings in the short or medium term, but you do not know what kind of investment you choose? On all existing markets, today I'll compare the Forex (Foreign Exchange) and the Stock Exchange (Shares).
The stock market is a relatively known in which an investor acquires shares (being shares in a company) at a price fixed by the market and sells it at a different price later. The goal when investing in stock is to buy shares that they think the value will increase to resell them and make a profit. It is therefore important to know the company in question, its economic situation, which may affect the share price.
In addition to the profits realized on the purchase and sale of shares, the investor - the shareholder receives a percentage of profits made by the company during the period corresponding to the holding of shares. These are the dividends.
It is therefore possible to invest long-term stock market, driven largely affect dividends without necessarily being interested in the resale of securities.
Forex for him is a lesser known market that is becoming increasingly important for individuals through the Internet. It is now buying foreign currency "speculation" on the change in their courses for resale by having made a profit.
For example, buying U.S. $ 100,000 EURUSD 1.4050 at 15h and reselling EURUSD at 1.4022 at 16h, it invests € 71,174.38 € 71,316,50 and recovered. It may well play on tiny movements in the dollar to gain in this example € 142 an hour.
Yes you say, but everyone does not invest € 75,000! And you're right. That is why almost all brokers offer the world to leverage your investment. For example, consider a leverage of 1:100, which must be the lever as used today.
€ 5000 by placing a Forex account, your broker offers you a trader capital of 500,000 €. It's like a loan, without interest. The broker does not earn money on your purchase orders and sales.
What is the risk? It is limited to the money you have deposited in your Forex account.
Say you buy a lot of pounds sterling (100,000 GBP) and the price of the pound falling dizzily, the broker will automatically sell your lot if the estimated loss amounts to the sum you have in your account. So the fact of using leverage to multiply your gains and losses, but there is no risk of losing more money than you deposited.
It is important to stress this point because that's what I was most afraid when I'm interested in Forex. Investing € 5,000 and € 50,000 is impossible to lose.
The advantage is that the Forex market is more stable than the stock (the currency pair does not vary much as the action of a small company), the market is much bigger (all central banks exchange currencies 24 24, amounting to several thousands of dollars every day) and more liquid (you can buy / sell and withdraw its profits in minutes directly from your PC).
Read also: 8 Reasons To Invest In Forex.
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