Stocks versus Forex. Discuss

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peugeot205

There is a thread currently running on a well known forex trading site about the merits and demerits of trading stocks versus forex. However I think that population sample is biased as a forex site is for forex traders so any responses are vulnerable to the "self selection" bias. Elitetrader is better in that respect as people here trade everything. Well what do you think? Which is a better trading instrument? Stocks or forex? I am not sure myself. Stocks usually have an upward bias over a long period of time and I think the trends are more predictable than in forex. Furthermore Warren Buffet one the richest men in the world is mainly a stock trader. On the other hand forex has more liquidity and leverage. Apparently some people think it more closely follows the principles of technical analysis (although I hadn`t observed that). So I have a small tendency to think at the moment stock trading is perhaps a better vehicle to create wealth than forex. What`s your educated view regarding the above?



regards,

peugeot
 
Global thats the point. People will express a preference according to the one they trade most. Thats completely natural. I wonder is there someone here who regularly trades BOTH forex and stocks who can give their insight? That would be interesting to hear.
 
I trade stocks (via options) and forex..err well, currency futures.

Overall I make more money via stocks, but still like the futs.

If I had to choose I'd take stocks.
 
Does anyone think that th following is true:-


Swing trading is easier on stocks because you can find out the sector thats trending most (theres always something in a good trend) and just trade that. In contrast with the currency majors they dont always trend and theres only a choice of four of them. Hence that would make stocks better to trade than forex.


(I am assuming the principle that the best way of make money is find the best trend and just jump on it)
 
Quote from peugeot205:

Global thats the point. People will express a preference according to the one they trade most. Thats completely natural. I wonder is there someone here who regularly trades BOTH forex and stocks who can give their insight? That would be interesting to hear.
More...

Actually, I've tried trading forex for over a year in simulators, no luck. I've done better in stocks and even futures(prediction, then trading the stocks in the sector)
(1)Technical analysis doesn't work as well. Breakouts rarely meet their projections
(2)Correlations don't work well. In stocks, a gold stock will rise if gold goes up. In forex, I've lost quite a few times, doing that with AUD/USD.
(3)There are many factors that affect exchange rates, while less factors affect a company. A good company that makes a simple product is less effected by outer factors than forex. At least a mine won't blow up or rebels don't go and seize their factories w/e. There's a smaller chance of those things happening.
I tried to make a macroeconomic projection(based on interest rates this year) and concluded that the ECB would likely hike rates while the Fed would keep them flat due to an inverted yield curve. The EUR/USD showed a H&S bottom on the daily chart.
Yup, the next day, the euro goes up 150 pips against the USD. The next week, it crashes 400 pips due to rate fears. Now there's lower unemployment etc etc things that I didn't even think would occur are entering the equation, so a projection that I thought could've fit the whole year of trading is being destroyed, and I'll have to figure out a new one.
This happens less in stocks. In stocks 2006 will be a cyclical bottom year etc etc :p.
 
I guess it depends on the temperament, psychology, risk tolerance, and general ability of the person. I've traded stocks for awhile and am still under a year in forex. However, I've been making 10-20% monthly on the forex with a very low lose to win ratio. Once every other millenia, I'd hit 20% monthly in stocks. I presume my personal make-up and strategy combine well to profit more in Forex.
I like the fact that there are fewer gap-ups/downs in FX. To me, at least, the trends are easier to catch and the ranges are easier to trade. I wouldn't mind trading a stock opportunity that reads an almost sure thing according to my criteria, but I no longer look for opportunities in stocks. I've been strictly FX for maybe 5-6 months and don't see myself going back to stocks anytime soon.
 
Very interesting responses global and naz. I have noticed that when people do well in forex they do very well. However a lot depends on ones trading style, but by my anlyses it seems that trading using weekly charts is better on stocks than forex and its not that hard to find a sector thats trending well with stocks. I will probably trade some forex too as the possibiilty of trading like george soros intrigues me (!) Perhaps one should find something that one feels comfortable with and just stick with it without getting too greedy.
 
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