Forex vs stock
- Thread starter Trader D
- Start date
I am just a punter , but here is my take....
Forex provides you with a high amount of leverage. 50:1 in the US and upto 500:1 in some countries.
The difficulty in trading forex is the very sharp intraday reversals. If you look at the intraday candlestick chart, you will notice a lot of long tails. You can trade a longer time frame, but you will still see some very big tails/reversals. I have tried to data mine strategies using genetic algorithms and find it more difficult to produce high risk return strategies. The carry trade seems to be the king of all strategies. But when it takes a loss, it is a whopper.
There is less diversity in currencies since most of the news is global/macro in scale thus you are mostly long or short the dollar.
Forex provides you with a high amount of leverage. 50:1 in the US and upto 500:1 in some countries.
The difficulty in trading forex is the very sharp intraday reversals. If you look at the intraday candlestick chart, you will notice a lot of long tails. You can trade a longer time frame, but you will still see some very big tails/reversals. I have tried to data mine strategies using genetic algorithms and find it more difficult to produce high risk return strategies. The carry trade seems to be the king of all strategies. But when it takes a loss, it is a whopper.
There is less diversity in currencies since most of the news is global/macro in scale thus you are mostly long or short the dollar.
I would say, that's a pretty accurate analysis of how it usually goes
Could you elaborate more on the carrying strategy. Also could you elaborate on the different leverages their risk and benefits.
The carry trade = borrowing low interest currencies to buy high interest rate currencies and pocketing the difference.
and it can just about kill you if you are a betting man and stay on the wrong side for an extended period of time, but still, some of us like to do it
Besides higher leverage, potential for strong one way trades, larger risk appetites, carry clipping (with its inherent dangers as mentioned above) I think the causality of news flow aids forex trading more than single stocks. You always need a top down macro view on your book IMO regardless of style/strategy. That automatically positions you well for trading forex and you don't need to go down one more layer into the weeds that stock trading requires.
Stock is different from forex. In forex we we can trade with low amount and experience too. Stock market works morning to evening , in forex we can trade any time in 24 hours. I prefer forex on stocks. It is up to your choice which suits you . In forex all type of people can work easily.