Speculation: securities VS currency market
RTS IndexThe Russian stockbrokers' morale was boosted by the fact that the MICEX index rose above the downtrend of 2011 and the MICEX index, albeit tentatively, but updated its historical maximum. Their eyes, burning with a greedy and satisfied gleam, are the best advertisement for brokerage houses. Rows of new recruits streamed to our training center for new knowledge.
stock traders
Newcomers mostly come in with no basic knowledge at all. We help them choose their way easily. But there are newcomers "with a load" - traders who have already tried their hand at over-the-counter FOREX trading. It is sometimes difficult for them to get used to our exchange terminals, but people accustomed to high-risk trading have no equal in market analysis.
Recently, one of these newbies asked a question: "Is it possible to work in the stock market as dynamically as in the FOREX?" Is it possible to speculate on the "fund"?
Speculation: securities VS FOREX
Let's compare a number of features of work at the Russian exchange and find out the main advantages before speculating on the FOREX.
1. Trading time
And yes, this is an advantage! Russian exchange assets are traded for a limited time during the day, unlike currency pairs on FOREX. This means that you can create a convenient schedule, which will have enough time to rest and make a trading diary. You don't have to wake up at night and watch the beginning of trading on Asian markets. You have time to spend with your family.
You tell me, in the morning there will be gapwhich will eat up all of yesterday's profits - will the advantage deflate? So we're talking about speculation! There are some simple exchange techniques that allow you to protect yourself even for those speculators who decide to move with the positions overnight. Well, elementary, you can calculate the average size of the gap and at the close of the session decide whether it is worth it to move the position overnight. The data, by the way, for this calculation will be homogeneous, without errors, which often appear because of the peculiarities of pricing on the FOREX.
2. The cost of the lot
The minimum lot value on the currency market ranges from 1,000 to 100,000$. That is, if you want to make a deal, you will have to take a loan if you do not possess that amount. On the nondollar market you regulate the credit amount yourself, and you may not take it at all. After all, some lots of exchange-traded securities, such as stocks, are worth about 500-1,000 rubles.
3. Leverage
Only through the effect of a large leverage You get a wild return on FOREX. If we level the odds, and look only at the dynamics of quotations, then the choice for the beginning speculator is obvious - it's the stock market. In particular, it is not bad to start with the stock market.
Let's compare the dynamics of the popular stock exchange indicator RTS Index and EUR/USD pair. Since the beginning of 2016, the RTS index increased by 29.95%, EUR/USD by 3.42%. But this is the final indicator as of September 9, 2016. Suddenly, within the year, the currency pair was swinging in such a way that the returns from intraday fluctuations were several times higher? If we compare the percentage difference between the highs and lows of the RTS index and the EUR/USD pair, we get the following values 2.44 and 0.84% respectively. Yes, the stock market does not have a huge leverage, but it is possible to earn three times more on intraday fluctuations!
Is FOREX really that bad?
The question arises: is FOREX bad for speculation? No, it is a good earning opportunity for those, who are ready for 100% risk and want to take increased liabilities in the form of leverage. Also FOREX is good for those who chase low commissions. Well, that's pretty much it!
Maybe on the plus side of currency speculation can be given a fairly narrow spectrum Fundamental news analysis. On the stock market, we have to monitor the condition of the company whose shares we are trading, the global background, the investment climate in the country. And in the foreign exchange market - just watch the rate of the world's largest banks and the macroeconomic factors affecting it. Although, for me personally this advantage of FOREX is debatable, I like to find a few reasons for making a deal. But such a choice makes some people unhappy, they get lost...
Where do you speculate? And why?