Trading with shares. Advantages and disadvantages.
After opening an account for trading on CFD contracts (more details on opening this account can be found here), a new world of stock trading opens up, which differs from currency instruments and commodity assets. In turn, as some groups of currencies differ from each other, as well as commodity assets, gold or oil differ from currencies.
Trading with shares also has its own nuances, but do not be afraid. These differences, though very significant, but not critical and very easy to understand. Immediately it is worth noting that trading on the FOREX market in currencies, shares or commodities will always include such concepts as volume, swap, spread and buy or sell transactions. In fact, these concepts summarize the whole Forex market.
Also, do not think that tactics or strategies or indicators suitable for currency pairs are not suitable for shares. It is not true. As a rule, all the classic strategies were developed for the stock market and then moved to the foreign exchange market. Therefore, there is more in common between these markets than it might seem at first glance.
Still, there are some differences between the currency market and the stock market. These advantages and disadvantages we will cinsider now.
Advantages of trading with shares
Efficiency analysis. Shares are more effective in analysis because of their nature, since they are less susceptible to fundamental factors than the same currencies or oil. The resulting technical signals on the share price chart have a greater degree of development than in other markets.
Also, strategies or indicators operating in the foreign exchange market will work in the stock market. There is no need to re-learn new strategies or indicators. For greater effectiveness of a particular strategy, it is better to tailore it to a specific tool.
Minimal fundamental risks. It means that the overall level of risk is noticeably lower. Of course, it could not be said that shares are not at all subject to fundamental risks, since this is not the case. But if compare it with the US dollar, other currencies or the cost of oil, the dynamics of the majority of shares of large companies offered by Ester Holdings Inc. are more stable. As a result, the trading process itself will be safer and more profitable.
A variety of trading tools. While trading on currencies, it can be noted that some pairs (major) are more preferable on the market than some kind of exotic cross rates. In the stock market, actually all CFD contracts have high liquidity.
Availability of information. Reports of large companies and news about it can always be found in free access and it makes trading with shares more transparent, unlike even the currencies whose Central Bank meetings are always held in the strictest secrecy and are often distorted by the countries government.
Shares, like companies, belong to certain industries that allows, following a particular industry, to trade successfully with a group of shares that are often distinguished into indices, and which are an auxiliary tool for trading with shares.
Disadvantages of trading with shares
Trading session. The main disadvantage of shares is their limitation to one trading session (stock exchange time), when currencies and commodity futures are traded around-the-clock five days a week. Because of this, it is worth adjust your strategies and keep track of trading time.
New tools. Despite all the advantages, shares for a trader-beginner will remain a “dark forest”, which will take time and effort to learn. Anyway, for a successful result, you will have to make efforts to master this market and your efforts will be rewarded.
Trade with shares with Ester Holdings Inc.! Have profits!