Forex Vs Equity Vs Commodity
Every Investor can invest in 3 segments namely, forex, equity and commodities.
Deals with currencies
Related to companies and their shares commodities deals with metals, energy, and agricultural products. It is necessary to understand the differences.
The Forex market offers less trading options because a majority of traders prefer to deal in only the major currency pairs such as EUR/USD, USD/JPY, and GBP/USD. Whereas, the commodity and stock market offers more alternatives to traders
Simplicity of Trading:
Trading in commodities is comparatively simple since it is all to do with supply and demand. Whereas in forex, success is more dependent on system and strategy. Trading on the stock exchange requires more of research work.
The forex markets are open five days a week and 24 hours each day. The stock exchange offers the shortest time frame for trading, but the commodity markets stay open from around 10 am to midnight.
The forex market is a great opportunity for short-selling especially due to its immense liquidity potential. Here, margins are much lower than with equity. The stock market is prone to high liquidity risks. Restriction is more with short selling in stock trading.
Metal and energy contracts have a cut off barrier of 6 percent up or down while stocks can move even 20 percent in a single day. For agricultural commodities, this stands at 4 percent. Forex is conceivably the most constant of the three.
The brokerage rates are similar across all three segments, but greater volumes of trading will lower brokerage expenses. As a result, the forex market is liable to get an edge over the other two here.services such as online share trading and live tracking of commodity prices have simplified the process of trading.