Stocks vs Cryptocurrency vs Forex, which ones should you invest in 2021? Detailed overview

Stocks vs cryptocurrency vs forex

Investing and trading have become a necessity in the world struggling with numerous diseases and uncertainty of life following uneventful days. The latest example is the COVID-19 virus. It has taken global businesses and jobs by storm. The pandemic alone has resulted in millions of millennials joining the race of trading in different instruments.

Today, traders have several options for investments. As a result, trading instruments and assets have grown by leaps and bounds over the years. Stocks vs cryptocurrency vs forex, you name it.

The virtuous concept is burgeoning with people finding new light of hope in financial markets and trading. As a result, every instrument has become fast-paced, and queries are reaching a record high to know them better. Brokers like 101investing, PrimeFin and Capixal are relieving the fresher traders through their educational courses. These programs are helping them grow their interest in trading and investment. 

Understanding different financial markets and instruments 

Trading is not about going around blindly and investing funds because peers are doing. One has to give full attention and learn the sneak-peeks of the market before putting the funds across. They need to know risk tolerance, spending from savings and cost management before beginning. 

Today, traders are exposed to thousands of markets and various trading instruments, including ETFs and CFDs. Thus, the best viable option to connect with the market is doing a thorough study. 

Notably, every instrument operates differently from the other, and their concept of trading is distinct. So, to become an expert on a subject, a trader needs to go full throttle and do the know-how exercise. 

For instance, short-term holding, scalping and swing trading are some nuances that belong to the forex market and traders mostly. Meanwhile, long-term trading attributes to the stock exchange, where market participants take time before they short assets or shares for a better return on investments. That’s one of the elements of their strategies, and that pays off handsomely more often. 

Likewise, while trading cryptocurrencies, traders prefer day trading. People see several opportunities of buying and selling within a day that offers pleasant benefits to traders. 

Benefits of investing in stock markets 

Investing in stock markets is potentially one of the most viable options that a trader can consider before starting as an investor in the financial markets. Moreover, it is one of the oldest ways of investments that traders prefer as an alternate source of income. However, some people consider investing in the share market risky; but there are no rewards without risking something. Also, there are tools, charts and indicators that can negate risks. 

Brokers like ETFinance and ABinvesting can help you achieve profitable goals while adhering to the basics of trading. 

Securing financial goals automatically comes as a byproduct if a trader can understand and manage stock trading requirements. 

Some of the advantages with investment in stock markets 

Trading in stock markets is advantageous for traders who can control their greed and do not overspend initially. Also, market participants who rise to the occasion when stocks descend can earn good money. 

It is noticeable that one should primarily invest in blue-chip stocks for promising income because they are fundamentally and technically strong. Also, they have volumes and backing of the industry. 

Income through dividends 

For people who are not active traders, sitting back and earning through dividends is one of the ways of drawing earnings and funds in their bank balance. So, they can indulge in buying stocks that produce great dividends to their shareholders every quarterly or yearly. Also, investors can pick up those companies that have emerged strongly with stupendous performance over the years. 

Moreover, dividends come by even when companies face losses in revenue or sales. Thus, there is some amount that will always arrive at the buyers’ disposal. 

Thus, that’s a sugar coating that every trader would like to consider during investment. It cuts down perils to a certain extent. So, dividends are like an interest for investors. 

Grow your money 

The main object of trading in the stock market is earning money. However, there is no surety, but tricks and methods can avail heavy benefits to investors. Several stock markets are rising in value, with an elevation in individual stock prices. Investors are earning money by investing in stable companies that are showing steady growth prospects. Moreover, there’s an option of diversification by investing in different sectors’ stocks. 

Liquidity aspect 

Liquidity is one of the fairest reasons why investors put their hope and funds in various stocks. If someone requires money for an emergency, they can be sold anytime. So, that’s the credibility and assurance which keep stockholders stress-free. Their funds are safe. Buyers and sellers are in abundance here. 

Ownership 

If you buy a significant number of stock shares, you may even become an integral part of the company. That means, as a shareholder, you can participate in the policy decisions. Where else do you find such freedom and options? Of course, you cannot own assets or instruments in forex, commodities, indices or cryptocurrencies despite heavy investments, but here you can. That’s exemplary and worth noting for a trader. 

Chances of heavy returns 

When the market is fluctuating or showing signs of heavy swings, traders or investors get the chance to make quick money even through penny stocks. Thus, that is morale-boosting for traders. Thus, the returns are far superior to any bonds, insurances or fixed deposits. 

Invest in smaller amounts 

Stocks present the opportunity to invest in smaller amounts, which is not an option with several other securities. So, investors with thin fundings can also consider investing in the stock market. That’s the added advantage for a trader. 

Consider preferred and common stocks 

Before going for any investment, a trader should look into the dynamics of different sets of stocks. They are majorly compartmentalised into two sections:- 

  • Preferred stocks 
  • Common stocks 

Preferred stocks 

  • Traders can expect lower returns 
  • Shareholders cannot avail of any voting rights
  • These are mainly chosen for income
  • Risk is lower
  • They pay high dividends
  • Their priority status is higher in bankruptcy 

Common stocks 

  • It comes with higher returns 
  • No guarantee of dividends 
  • Investors can have voting rights 
  • Risk is higher 
  • Their priority status is lower in bankruptcy
  • It is chosen for capital gains 

Advantages of investing in forex market 

The forex market is a mine of advantages for traders. World trade gets channelised through currency exchanges, and their regularly changing values provide opportunities for investments for earning quick profits. Moreover, the changes in currency pairs are difficult to measure because they flip numbers in split seconds. So, irrespective of the bearish or bullish market, chances of accumulating money is always present for investors. 

Thus, the forex market has plenty of advantages that lure investors for investments. 

High leverage 

The foreign exchange market has the most significant benefit of high leverage. It means you can start trading in the market with huge ambitions and earn bigger chunks. For example, a trader may have USD 3000, but with the 1:100 leverage capacity of a broker, the bidding can happen on currency pairs worth 300,000. Thus, that’s a massive amount. However, getting the prediction right is the key here. 

If there’s a slight mistake, the probable benefits can turn into humongous losses. Thus, despite the meagre movements in the currency markets, traders can still make significant returns. 

Interests in holding currencies 

 If you hold a commodity or indices or metals, you get no interest or dividend as an investor. However, with forex, you fetch interest irrespective of whether the currency prices grow or not. So, if some traders keep currencies and forget, the interest will add to the funds, similar to several banks on their customers’ deposits. So, investors make passive income. 

Low transaction costs 

Most of the brokers charge low or no transaction fees from their clients. So, investors save their money. Hence, is it an advantage compared to investing in stocks or commodities where transaction or trading costs can be higher. One can find that on a percentage price basis. It happens because dealers primarily operate in the forex market.

They reserve a spread for covering the risk and offer a two-way quote. Interestingly, in forex markets, the pure-play brokerage is lesser compared to other financial markets.

Flexibility  

The forex market remains operational 24/7 worldwide. So, it gives an option of flexible trading. Traders can take their time and research news alerts and economic situations before investing. Investors do not have any restrictions for using minimum or maximum money. They can begin trading with any amount provided their brokerage firm allows that.

Thus, people doing regular jobs can also manage their time and indulge in forex trading as per convenience. However, this facility is not available with stock markets. 

Hence, investors are growing in an already swelled market that transacts more than USD 6.6 trillion daily. It is fantastic for part-time traders. 

Decentralised and transparent 

Despite being traded worldwide, the forex market is decentralised and investors can trade it freely without inhibitions. Also, the transparency factor due to easily available information makes trading conducive for investors. No financial institution or central bank can rig the outcomes or valuation of a currency due to the mammoth size and volume of the market.

Also, all are welcome to invest here due to decentralisation. Therefore, there’s no discrimination in the market against any investor. It commits to free and fairgrounds for earning to everyone. 

Wide variety of trading options 

The trading options are immense in the forex market. It presents traders with a wide range of opportunities. Investors can indulge in spot trading, swing trading, scalp trading, momentum trading, day trading, position trading, futures trading etc. Investors can indulge in different types of future agreements with distinct sizes. So, a trader has a burgeoning market lurking at traders. 

Investors with a low to high budget, everyone can get their piece of liberty for trading in the forex market. Hence, people with a myriad of risk-taking can earn money here. 

Unmatched liquidity aspect 

The liquidity factor is unmatched in forex trading due to cyclopean volumes. You can place your bid and sell or buy any currency pair within split second. So, entering and exiting the market is a matter of bidding for a trader. On the other hand, that cannot be guaranteed by the stock market or commodity market to traders. 

Advantage of trading cryptocurrency 

The cryptocurrency market is being cited as the future currency market that may replace or become an apt alternative to fiat currencies. Moreover, the movement exhibited by bitcoin post the spread of the coronavirus pandemic worldwide was unprecedented. It induced a lifeline in hopeless traders and investors. 

Quick and inexpensive

The transactions of cryptocurrencies are massively quick and do not require any banking support from the banking network. Also, people sitting in any corner of the world can give and receive virtual coins within seconds. So, it’s a time and money saver. When you transact fiat money in the international market, one has to pay a lot of fees and along with waiting for a longer period for the amount to settle. 

The cost for doing so using cryptocurrency like bitcoin is either negligible or non-existent depending on the type of broker and exchange used by an individual. 

Lower fraud risks and transparency 

Investors use cryptocurrencies for investment due to their transparency and lower or no fraud risks. The financial information of the seller and buyer remains concealed in encryption. So, no one can reveal that. The blockchain technology ensures no one can steal your coins and digital footprints enable the protection layer. Thus, if anyone attempts or tries to get your bitcoins, that person can be tracked swiftly. 

Stocks vs cryptocurrency vs forex: Conclusion

Trading in the financial market opens doorways of financial liberty for people. You are your own boss here. It is the ability of an investor to understand the market and extrapolate strategies that earn money. Moreover, brokers like PrimeFin,  play a pivotal role in investing. So, there are benefits and equal drawbacks in all financial markets be it cryptocurrency, forex or stock. It is the intelligence of an investor that makes the difference. 

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