Since the launch of the Forex market, the debate has been continuing and interestingly, still did not lose its power. As a follower of the stock market, the Forex industry has definitely closed the gap or even may have outpaced it.
The data about trading activities in 2020 are not crystal clear yet. However, we know that the pandemic has caused a lot of people to lose their job and it is undeniable that these people have looked for other ways to compensate for their losses. While the stock market has not offered a bigger proportion of gain, the forex market has attracted so many traders with the help of the leverage system. Of course, this is just one criterion and there is more for traders to evaluate. Here, you can find some of the others and choose which one you will trade.
- Market Hours
One of the most impressive features of the Forex market is its decentralized structure. In an over-the-counter market, the traders do not need a third party to make transactions and the trades are executed when two parties agree upon the conditions. This allows traders to trade 24 hours a day, which seems like a big plus especially for the workers. On the other hand, stock markets are usually open 8 hours a day in most countries. When the difference between timezones is added to that, the stock market becomes more and more limited and that is why some traders have switched from the stock market to the forex market.
- Trading Volume
In terms of trading volume, the Forex market definitely dominates the stock market. The average daily trading volume was $6.6 trillion in the Forex market in 2020, and it is expected to exceed $10 trillion in 2021, while the number is only $200 billion for all stock markets combined according to data from 2020. A bigger trading volume means faster transactions and a higher level of liquidity, so the Forex market has an advantage in that category.
- Additional Costs
When you trade in the stock market, it is probable that you face a very high rate of commission along with the spread. That is because the stock market is a centralized zone and the necessity of a broker is reflected in the commission. However, traders pay less or no commission to a Forex broker. The reason is that the brokers have many sources of profits other than the commission, such as taking a position against the traders, and their costs are lower with the absence of a regulatory third party.
The Decision Is All Yours
The features above can guide you to make the right decision, but at the end of the day, everything depends on your preferences and what type of trader you are. If you want to make a profit by only focusing on volatility rather than fundamental variables, then Forex might be a better idea for you. On the contrary, if you are not a risk lover and only planning to take a position on a long-term basis, the stock market looks more promising. Thus, do not forget to identify your trading character and take a step accordingly.
SEE MORE: 14 Reasons to Choose Forex Over Stocks
