The Truth About Forex vs Stock Trading
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#642: The Truth About Forex vs Stock Trading
In this video:
00:22 – Should you trade Shares or Forex?
01:04 – Are shares erratic?
01:38 – You need to factor in the exchange rate.
02:31 – You are in charge when you trade Forex.
02:50 – People buy what they know and like.
04:40 – We trade the pattern, not the emotions.
05:12 – Different time frame charts and markets.
05:33 – Check out my new Masterclass.
05:49 – Blueberry Markets as a Forex Broker.
06:05 – Like, share and subscribe.
So which is best to invest in, either forex trading or share trading? Let’s talk about that really important topic and more right now.
Hey Traders! Andrew Mitchem here at The Forex Trading Coach with video and podcast number 642.
Should you trade Shares or Forex?
Today I want to talk about share trading or forex trading, which is best, which is best for you, and what are the key differences.
The reason I want to talk about this today is because I’ve just seen on the news, right now, that the SpaceX shares have dropped quite a lot.
Now, about 1 month ago when SpaceX got launched, I had quite a few people who are friends say to me, “Hey look, Andrew, are you going to get in on this? Are you going to buy SpaceX shares?”
Very roughly, they started at about $130 USD, quickly climbed to about $150, and I think they got to about $225 very quickly within a handful of days.
Here we are 1 month later, and they’ve just dropped back below $130 again.
Are shares erratic?
The issue that I see there is it’s kind of a little bit erratic. Now, I’m not saying that all shares do that, of course, but this is just an example of a very well-known share that’s topical right now.
So if you imagine that you jumped in there at $150, $175, $200, or even right at the top at $225, and here we are just a few weeks later and it’s worth $130.
You’re going to start panicking, aren’t you? That’s quite erratic kind of behaviour, especially if you’ve gone and put some considerable sum of money into that.
You need to factor in the exchange rate.
The other thing I think that a lot of people outside of the US don’t factor in is the exchange rate. Here in New Zealand right now, the New Zealand/US exchange rate is actually really quite poor. It’s sitting around $0.56. It’s very low.
Therefore, that means that if you’re buying something in US dollars, that’s very, very expensive. So you’ve got to factor that in.
Now let’s say that you go and take your money out of the shares, and the Kiwi dollar rises up to about $0.70 against the US dollar. This same example, by the way, is typical whether you’re in Canada, the UK, Europe, or anywhere else.
You might have made some money on your shares, possibly, but by the time you bring it back at a better exchange rate, you’re actually not making anything. So that’s one thing to really consider as well for everybody outside of the US.
You are in charge when you trade Forex.
The other thing I think with forex is it’s more consistent. You’re in charge. Of course, you can buy, you can sell, you’ve got leverage, and you’ve got the ability to trade through prop firms as well.
So all these advantages mean you don’t need to put that amount of money straight into something and then sit and watch it, hoping it’s moving up.
People buy what they know and like.
Another classic issue that I see, and SpaceX actually is a very topical one, is people were saying to me, “Hey Andrew, I like what Elon is doing,” and all the other things that are out there.
Of course, the news media kind of hypes it all up. People know SpaceX, they know Elon Musk, so they go and buy it.
Now, I’m not saying you shouldn’t do that, but what I am saying is people tend to follow things that they know.
Another New Zealand classic is back years and years ago, I had a lot of friends that bought Air New Zealand.
Here in New Zealand we don’t have a huge amount of iconic companies, but Air New Zealand, being the national airline, is one of those. It’s a globally recognised brand.
Years ago I had a lot of friends buying Air New Zealand shares.
Why did they buy them?
Well, they bought them simply because they knew of Air New Zealand. It’s topical, everybody flies on them here, and so they bought based on the name.
Now I’ve just had a look back, and in 2000 Air New Zealand shares were $7.50. They peaked at around $7.50 per share.
Right now, here we are some 26 years later, they’re $0.43.
Now imagine if you had invested $10,000, or bought 10,000 shares at $7.50 each. Today, 26 years later, they’re down to $0.43.
Now imagine what would have happened if you had invested in learning how to trade the forex market back in the year 2000, and the money that you could have made by understanding the markets, different time frame charts, choosing what to trade, whether to buy or sell, what time frames to use, how long you’re in the market for.
We trade the pattern, not the emotions.
What I love about the forex market and the way that we trade is that we’re trading the pattern. I don’t just trade New Zealand pairs simply because I live here. It’s completely irrelevant.
If you’re in the UK, you don’t just trade the pound pairs. If you’re in Australia, you don’t just trade the Aussie pairs simply because you live there.
We trade what we see setting up right now on the charts, and that takes the emotion out of it. You’re trading the pattern, and that’s key.
Different time frame charts and markets.
Just this week, for example, I’ve taken 2 weekly chart trades. One was a GBP/NZD sell and that hit profit. The other was an AUD/CHF buy and that hit profit.
You’ve got longer time frame charts like that.
Just last night I took a Nasdaq 100 3-hour chart trade.
So you’ve got shorter time frame charts like that as well. You’re trading the pattern, and that takes the emotion out of things a lot more.
Check out my new Masterclass.
If you’d like to find out how we do this and how we can help you do the same, I’ll put a link here to my new masterclass. It’s only about 15 minutes long. It’s on demand.
You can just click on it and watch it through. It teaches you about how we trade, what we’re looking for, and how we can help you do the same.
Blueberry Markets as a Forex Broker.
If you’re out there looking for a really good forex broker that you can trade not only forex but also other markets like metals, cryptos, indices, and commodities, and they’re a great bunch of people as well, that’s Blueberry Markets. I’ll put a link to them here as well.
Like, share and subscribe.
Don’t forget to like and share this around, especially if you’ve got friends that might be interested in starting trading, or maybe they’re thinking about share trading.
Like anything in life, there are pros and cons and traps with everything.
I’m not saying don’t trade shares. I’m not saying do trade forex.
I’m just giving you some real-life examples that I’ve found through friends of mine, either like the New Zealand example from 26 years ago or like the SpaceX example from just 1 month ago when they launched and the price dropped.
By the time you watch this, if you’re watching this years later, the price might be way higher.
Who knows?
But the point is, do you want to be in control of what you’re doing and decide for yourself?
If you do, then maybe consider the forex market.
This is Andrew here at The Forex Trading Coach.
I’ll see you this time next week.
Bye for now.
Episode Title: #642: The Truth About Forex vs Stock Trading
Find out more about Blueberry Markets – Click Here
Find out more about my Online Video Forex Course
Book a Call with Andrew or one of his team now
Click Here to Attend my Free Masterclass
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