Investing as a Student: Forex vs. Stocks

Student life can be expensive. Many students believe investing is a jungle of principles and strategies that requires absolute professionalism. This line of thought is misguided and uninformed. For instance, if your goal is a million dollars by the time you are 60, then invest from the time you are young, a little amount of money monthly at an average realistic profit rate. The majority of students take to forex trading or stock trading, as principles for guiding their investment.

Factors to consider

  • How much are you willing to invest?

As a student, financial constraints arise due to a number of reasons. Luckily, it is possible, to begin with, little investment capital of a hundred dollars. This ensures you build up a reserve along the investment road. An alternative is to make periodical investments where one invests a fixed amount of money every month. Most importantly, only invest money which you don’t need.

  • What would you like to invest in?

A wide array of investment paths that you can take as a student exist. Bonds, shares, and index funds are some examples. Commence with an in-depth understanding of your investment asset, then develop plans and strategies.

  • Goals

Failure to plan is planning to fail. When you are familiar with all the ins and outs of investing, you are better suited to think about your future and set specific, measurable, achievable, realistic, and timely objectives. Many students stop before they start because they are unaccustomed to the mechanisms of investing. Goals help you keep in mind why you started investing in the first place.

  • Required skills and knowledge

Be sure to get a swimming certificate before diving into the deep of the investment sea. Eliminate unnecessary risks. Do a thorough research and determine what skills are required. Use various tools at your disposal to familiarize yourself with the fundamentals of trading like forex trading broker platforms

Forex vs. Stocks

  • Volume

The forex market dwarfs the volume of stock trades. Due to this, forex traders typically get their orders processed efficiently and closer to the prices they want.

  • Liquidity

Generally, a market that trades in high volume has high liquidity. As a student, put into consideration the low spreads and transaction costs advantage of trading in forex, compared to stocks.

  • Availability

Forex trading is an over-the-counter market free of traditional forms of exchange. Traders have virtually 24 hours a day, five days a week to trade. Stock indices, on the other hand, are facilitated through the interbank market, trading is affected by different variables, and trade occurs at different times.

  • Focus

The forex market is narrow-focused. It’s limited to the eight major forex currencies, while in the broader-focus stock universe there are thousands. It is easier to keep track of eight currencies that are traded in pairs than on thousands of stocks.

  • Commission

The majority of forex brokers charge no commission but request for a portion on the spread, which is the difference between the buy and sell prices. Stock traders often pay the broker the spread plus a commission.

Take Away

As a student, make the smart move and invest part of your money. Whether you choose to trade forex or stocks is solely dependent on your goals and preferred trading style.