Forex vs. Everyone Else

Investors have options. Between the ever-growing number of trading instruments from blue chips, industrials, and futures, trying to decide where to trade can be an overwhelming decision to new investors.

Forex’s fast pace and inherent market volatility make for an attractive consideration, particularly for speculators and investors capable of adapting to an ever-changing trade environment. Investors looking for a more solid buy-and-hold approach may prefer the stock market.

Some areas to consider in comparison to forex trading:

Blue Chips

Blue chips are stocks from well-established and financially sound companies. These stocks enjoy the reputation of being able to operate/maintain profitability even during harsher economic times. Less volatile than forex by nature, they can be used to see steady growth potential.

Stability seems to be the name of the game with blue chip investments, which mean they lack the excitement and pacing offered by the more diverse forex markets. Investors tend to enjoy a 2:1 leverage access, which is understandable given the general solidity offered by blue chip investments. Trading hours generally hold at 9:30 a.m. to 4 p.m. EST, Monday through Friday, so anyone looking to engage in after-hours trading may not find blue chips flexible enough for their needs.

Indexes

Indexes are a combination of similar stocks which can be used as a benchmark for a particular portfolio or the broad market. Think Dow Jones or Nasdaq in the United States. These indexes provide traders with an ability to gauge the movement of the overall market. Index investors enjoy access to broad market exposure and tools such index futures and e-mini index futures.

Compared to blue chip investments, indexes have a higher level of inherent volatility in their market places. Short-term investors tend to favor this, although the average daily traded value doesn’t hold a candle to what forex markets offer. Large leverage amounts can also be employed in the indexes, and like forex, index traders can trade in large position sizes with only small investment amounts, although the dangers of the changing market can make or break an investor using that technique. Trade exists almost around the clock, although that volume also pales compared to forex markets.

So, Where Should I Trade?

Thanks to the internet, potential investors have much greater trading options then were available even ten years ago. With all the possibilities, investors need to start their trading after understanding what they want to accomplish. If slow-and-steady is the preferred pace, blue chips or a similar investment options might be best. Lighting-quick investors may find the pacing of indexes and forex more attractive, but the fast pace could be problematic. Consider the hours open for trading, the types of investments that seem the most attractive, and decide also what the end result of the trading will be.

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