The Difference of Trading Stocks, Forex and Gold

I often get questions from beginners who want to get into the world of trading , about what are the differences in trading stocks, forex and gold. Generally they want to find out that as a beginner they should trade stocks, forex, or gold. After I noticed, there was not much information on the internet about the differences between the three. Even if there is, the information tends to defend one because it is provided by brokers who sell services in this field. In this article, I will try to discuss the differences in trading stocks, forex and gold objectively.

Equations for Trading Stocks, Forex and Gold

Before discussing the differences in trading stocks, forex and gold, let’s first briefly discuss the similarities. Trading in stocks, forex and gold can both be done online, using a computer or smartphone. Trading in stocks, forex and gold also generally uses Technical Analysis to analyze the market. Many people think that trading stocks requires more initial capital than trading forex or gold. This opinion was true. But not now. Now we can open a stock account with minimal capital. Because the deposit requirements for shares are now getting smaller.

The Difference of Trading Stocks, Forex and Gold

In general, you could say trading forex or gold is almost similar. Generally forex brokers also provide gold trading facilities as well. The new striking difference appears when we compare the two with stocks.

• Trading time Trading in forex / gold is more flexible than stocks. Trading in forex / gold can be done for 24 hours (Monday-Friday). We can trade forex or gold at night. Meanwhile, trading in stocks only starts in the early evening.
• How to trade
  Trading in forex / gold can benefit in two directions (long and short). So we can make a profit when the price goes up or down. Meanwhile, the Indonesian stock market can only go in one direction (long). We can only profit if the stock price goes up.
• Potential Profits
  Potential profit in forex / gold trading is usually greater than stocks. This is due to the leverage factor and high price volatility. So with just a small amount of capital, we can potentially win many times over. It is common for forex / gold traders to profit tens to hundreds of percent in an instant.
• Trading speed Trading forex / gold is usually faster than stocks. This is due to forex / gold price movements which tend to be more volatile. Usually forex / gold trading is more suitable for people who want to get faster trading results.
• Complexity
  Trading in stocks is more complex than forex or gold. On the Indonesian stock market in 2021, there are more than 600 company shares to choose from. Whereas in forex we can focus on just one or two currencies, for example the euro, yen, etc. For gold trading, you only pay attention to one thing. Trading rules in stocks are also more complex than forex / gold
• Transaction fees
  For trading forex or gold, the broker takes a service fee from the difference between the bid and ask prices (this is called the spread). For example, if we trade Euros, a spread of 2 pips (2 points) is charged for each transaction. Meanwhile, in stocks, there are transaction fees for buying and selling shares, which are 0.15% and 0.25%, respectively, of the transaction value. If only calculated from the comparison of forex spreads and stock transaction costs, of course the spread will feel cheaper. But apart from spreads, forex and gold brokers usually charge swap fees for positions that haven’t been closed that day. This swap fee is quite large and is charged per day. While in stocks there is no hospitalization fee. When we buy stock, we can keep the stock as long as possible without being charged any fees.
• Price Manipulation
  In the stock market, the practice of comparing or frying stocks is known to increase or decrease prices significantly. Usually done by those who have large amounts of funds. But we can avoid this comparison practice by choosing stocks with good fundamentals. In forex, many people say that the value of the forex market is so large that it is impossible to fry or manipulate. Actually, manipulation can still be done, but in a smaller scope. Forex brokers, especially forex brokers whose legality is not clear, can manipulate prices. If we look at the forex price chart at each broker it can be different. This is not the case in stocks, in all stock brokers, the stock chart is exactly the same. Then the forex broker can trade against us, for example we take a long position, he is short.
• Security
  Trading in the stock market is much safer than in forex or, because security is guaranteed by the government. Customer funds are deposited in the Investor Fund Account at the bank. Customer funds that have not purchased shares are also guaranteed by the government. Then the shares purchased are also safe because they are stored in a government institution (KSEI). In forex or gold there are no guarantees like this. Especially if trading forex and gold by opening an account at an overseas broker whose legality is not clear, so it is prone to fraud, for example, suddenly the broker closes and money is lost.
• Risk
  In my opinion, the risk of trading in stocks is relatively smaller than forex or gold. From the previous description, we know that we can profit from trading forex or gold in two directions. But many people don’t realize that this also means potential losses in two directions. Then trading forex or gold also uses leverage, a minimum of 1: 100 to 1: 1000. So we can open trading positions up to 100-1000 times the capital. This means that we can quickly make big profits, but the risk is also big losses quickly. So it is not uncommon, many forex and gold traders whose money runs out overnight (hit by a margin call) because they are not careful. In stocks, we can only buy shares according to the amount of capital, so the risk is more measurable. Also the price fluctuations in forex and gold are relatively cruel than stocks. In forex or gold, prices can go up to hundreds of points in an instant so that in a short time bankruptcy. In stocks, the risk of loss remains, but more measurable. The daily fluctuation of share price is relatively not too sharp. Nor is it possible to go broke in a day like in forex or gold. Within a day, the maximum drop in a stock has a limit.
• What is Transacted
  In stocks, we buy assets. Because shares are ownership of a company. If the trade fails, and we lose money, we can turn into investors. If you become an investor and hold for a year you can get dividends. Whereas in online forex trading we buy or sell positions, which cannot be used as an investment. So it’s just a kind of position contract that one day must be closed. The position contract is left idle no matter how long it remains a position contract with the same value. Meanwhile, shares that are left idle in the long term can increase in value.

The following is a summary comparison of the differences in stock trading and forex / gold:

In my opinion, the advantages of trading stocks, forex or gold are relatively the same, each has its advantages and disadvantages. Now the question is which one is more suitable for beginners. In my opinion, it is advisable for beginners to trade stocks first, because it is safer and the risk is more measurable. Indeed, trading in stocks is more complex, but can’t you learn everything? You can read books about stocks. If stock trading is able to profit consistently, it’s okay to switch to forex. If forex trading is able to profit consistently, please try gold trading.

Source: http://www.juruscuan.com/trading/315-difference-trading-shares-forex-and-gold