Are you torn between trading stocks or CFD Trading? Whether you are just starting out or just wanting to diversify your portfolio, you might be wondering which one should work perfectly for you. So, which is really better, CFD or stocks? The answer to this is – it depends on several factors.
Both have their own advantages and disadvantages therefore, it is right to explore these fields so you will know which among them can complement your strength as a trader. Experiencing other areas of trading especially if you are getting bad results on your current one. The other option might give you much better results.
Consistency or Opportunity: Which should you choose?
Currencies are intended to be stable at all times. It is their general characteristics. If they happen to have wide swings in their value, the currency won’t work that well. Because of this, the central banks and the government of major countries are putting a lot of effort into maintaining the value of these currencies over time.
But, there will always come a time when wild fluctuations happen despite all the efforts of banks and governments to make it steady. For major currencies, it is very unusual for these occurrences to happen. It is almost impossible to have a change in the percentage point in one day.
For stocks, the game is totally different. It is designed to make money. Stocks that move upward mean that everyone gets benefited except of course to those traders who sold short.
But unlike major currencies in Forex trade, stock prices move more consecutively. Traders in the stock market won’t be providing much on the margin and opportunities to make a larger profit are highly possible.
Technical and Fundamental: Which one is better?
Investing in stocks means that you have more say on the company and you ought to know everything that’s going on in the company you invested in. How about the sales? Is there a new law that was passed recently that can affect the profitability of the company?
These might look like simple questions to other people, but to stock investors, these things influence the value of stocks in the market. Because of this, stock traders are most likely interested in fundamentals instead of the technical aspect.
The changes in the value of a currency are attributed to the movement made by large market makers. Although fundamentals push the value of currencies, it is the technicals that matter the most.
Sideways or Growth: Which one to use?
Without a doubt, those companies who are managed well will grow in the long run and their stock price could go up in no time. For this, long term trends in the stock market are popular for a long time ago.
These long-term trends are very advantageous to people who want to buy stocks and hold them for a long period of time. But it is totally different when it comes to Forex. Currencies fluctuate without notice. And you cannot do anything about it aside from employing some risk management to stop incurring too many losses, especially in CFD Trading.