Stock trading has been a sought after resource for hundreds of years.
Companies undertake stock trading to increase finance for growth and new projects, with each percentage of the stock representing a part ownership or share in the business. When the business does prosper and makes a surplus, the value of its stocks increase. Stock owners can dispose of their shares for a gain or keep the stock with a view to even greater profit in the future. On occasion, companies will issue dividends with the proceeds being distributed to share holders.
Stock are traded on stock exchanges, with most transactions being handled by means of brokers who charge a commission or fee for this service.
American stock exchanges embrace the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ). Most stocks are exclusively listed on one exchange, though big companies may have listings on a number of exchanges.
Stock trades were traditionally viewed as long term investments. So called 'blue chip' stock trading, ( those having proven value over numerous years ) will often form the basis of an investment portfolio. Short term trading is a comparatively new experience made plausible with the arrival of Internet marketing. These short term or "Day Traders" try to gain a trading edge arising from large daily fluctuations in the market, by buying and trading numerous times in one trading spell. It is somewhat risky, and any proceeds realized are reduced by broker commissions charged on each deal.
Stocks may occasionally be bought on margin, meaning that the investor borrows currency to buy the stock. Margin rates are commonly about 50% with the investor able to borrow as much as half the value of the stock.
Currency or FOREX Trading
The Foreign Exchange Market is entirely different to the stock exchange. By comparison to the stock exchange, currency trading is essentially a short term market. Most traders open and close deals within a 24 hour spell and at times within a few minutes.
Numerous currency trading trades can be made in one day without building up a big brokerage fee because currency trading trades are commission exempt. Brokers earn payment by setting a spread percentage of the difference between asking and selling prices.
Foreign Currency Exchange Trading is the largest monetary market in the planet. It handles transactions worth $1.5 trillion every day. in contrast, all the American stock exchanges together handle transactions worth around $100 billion every day . The vast quantity of currency trading means that it is one of the most liquid markets in the world.
There is always a buyer and seller for any type of currency because the world economy relies on the movement of goods between countries. The stock market offers less liquidity than the FOREX market as participants may elect to retain their investments, or alternatively, shift on to alternate markets.
It is worth noting that foreign currency trading is not located in any one place. Trading markets are located world wide and because of diversity in time-zones trades can be made 24 hours a day, 5 days a week, while stock exchanges have more restricted trading hours. While it is feasible to trade on exchanges world-wide, each exchange is an independent entity and operates for just 7 hours a day. There is no way to buy or sell a particvular stock that is only traded on one stock exchange when that exchange is not open.
Additional advantages of currency trading that should be noted are that it is more predictable than stock trading.
It follows well determined trends; and allows high leverage when compared to the stock market and it does not command a large investment, as small accounts can get you started with much less than $500
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