Stocks vs. Forex for Daytrading

[Colettejips]

I've done some reading on Forex recently, and it has some nice advantages over stocks (24 hour market, no commissions, greater leverage, not as news-driven as equities, etc.). Greater leverage is a nice advantage, since it means potentially bigger profits, but then again, bigger losses as well.

I've also read that the trends on Forex charts are easier to spot, and the trends tend to run longer than stock trends. Easy trends along with minimal commissions and greater leverage seems ideal for daytrading.


Right now, I'm learning how to swing trade stocks and I hope to eventually move into daytrading stocks.

However, if Forex is better suited for daytrading in the long run...I might as well just learn Forex instead of stocks. I'd hate to spend years learning one thing only to switch to another.


Thoughts? Is Forex really more profitable and ideal for daytrading over stocks?

[Cryperhycle]

24hr market- In stocks everybody is mostly in the same boat, there is an established pattern of volume. You can use that to your advantage by simply trading for an hour during the most active time period. In Forex volume is more erratic and unstable.

no commissions- There actually are commissions, they are called spreads. It is factored into the trades you make. Forex brokers would not be in business if they didn't get commission. Some Forex brokers can even get unscrupulous and charge you higher spreads if they want to.

greater leverage- Sure there is leverage but there's a limit to it in the US and that limit might be narrowed soon by the NFA. You need that higher leverage in Forex because EUR/USD is not going to go to from 1.3317 to 3 overnight, so you leverage to get higher reward from smaller moves.

not as news driven- you'd be surprised how much influence news has on price action. It is very influential in both stocks and currency.

Price action is price action. If you learn technical analysis in stocks you will be better prepared in Forex.

[CREDTYCLE]

Thanks again Doodman. You've helped me out multiple times. I guess you're right. Learning and applying TA in stocks makes Forex easier, in the case I ever do switch over to it. I'll continue learning about stocks- my original intention.

I'm assuming you personally prefer trading stocks over Forex, yeah?

[cultwydd62]

I trade a little bit of stocks and a little bit of Forex. I really have no preference, just depends on time of day. It keeps me interested. But I have been getting a lot into stock options. It's a little bit early for you to worry about options though, get some experience in stocks first.

[crystapiccinichcqp]

Thanks man, will do. I'm finally about to try out the TOS platform to get a feel for the market. Time to put all those studied indicators and oscillators to work, and study them some more.

If you don't mind me asking, do you day trade for a living? :biggrin:

[admin]

I mostly do swing-trading but I may daytrade some fast-movers that I don't feel confident holding for a longer period of time.