If you have ever done any investing in a financial market before, it is probably with the ASX market. Stock markets tend to get our attention first because of retirement funds through companies. When you decide it is time to branch out you are a beginner in foreign exchange trading, but you might feel extremely confident about investing appropriately. It is important to compare the differences of the stock market to ensure you do not make a mistake.
Analysts and Firms in Foreign Exchange Trading
The stock market tends to be influenced by news and rumours. If there is a rumour about one company buying another traders often get into the company doing the buying. When the stock goes up they make money. Of course if the rumour is false or it falls through it can be a major loss. In foreign exchange trading there are still rumours, but training teaches you to monitor the rumours, look for the expectations, and wait to see what happens in the hours or at least a day before the rumour and expectations will be confirmed. If you wait to see what some of the major heads are talking about or ready to reveal in the day or hours before the released data you can often see what the actual data is going to be. At the very least waiting gives you a chance to have alternative plans.
Since you depend a lot on the news firms and expert analysts it is important for you to focus on what is and what is not a rumour, the expectations from the top people, and then see what happens. You always want to look at who is saying something about foreign exchange trading. If someone with less influence in monetary and fiscal policies is talking about what is going to happen with the data report it might not mean a whole lot. When someone like Ben Bernanke in the USA starts talking it is definitely something to listen to. You have to read between the lines sometimes in what they are unwilling to say versus what they are saying. The unwillingness to confirm before reports means the person talking does not want to affect the market.
Four Currencies or Thousands of Shares: Foreign Exchange Trading Benefit
Consider analysing four of the key pairs in currency trading. You have four pairs that may have similar quote or base currencies. They at least interact enough that if you learn about one, you often know the news about the others. Even if you were to look at the G7 and then pick pairs that combine two of the G7 currencies it would be better for foreign exchange trading for profit.
In the stock market you are limited to the companies on your local exchange. You can sometimes set up an offshore account in a different country, but there are regulations. You have to invest thousands of dollars to get a profit from stocks. It is one of the reasons many switch from stocks to forex, since it takes less investment to make money.