In my last post, I talked about how I was thinking my future lay in share trading rather than forex trading. Well after writing this post, I was kindly sent a guest post from Nicholas Pascal that discusses stock trading in some detail, and highlights the differences between trading FTSE 100 stocks and AIM stocks. I hope you find it useful.
I think it’s important to first point out that there isn’t much of a close correlation between market movements in stocks and forex. An artificial connection between the two has been forged since the early 1970s, which saw the end of the era of fixed exchange rates and brought with it a new breed of trader making connections between stock price and currency market behavior. Nevertheless, this makes it harder to apply an indicator.
On the other hand, there is more of a socio-economic link between forex and stocks . When there is a booming economy, the market is flooded with foreign investors buying stock, which brings with it a high volume of foreign currency which is good news for the market of that particular nation.
In this post, I want to discuss the pros and cons of trading stocks on the FTSE 100 Index versus the Alternative Investment Market (AIM).
FTSE 100: PROS & CONS
- No minimum investment required.
- Offers good long-term growth.
CONS:- High volume of trading means that the index can easily move 100+ points in a day, which could result in high losses for spread betters with a small pool of trading funds.
- General risk exposure to lose more money than staked if spread betting.AIM: PROS & CONSPROS:
- Suited to the experienced investor who is comfortable with a high risk / high returns strategy of investing in smaller businesses.
- Wide array of listed companies; AIM attracts a high number of diverse international corporates.
CONS:
- Lower trading volume due to the majority of investors in AIM being institutional investors.- 'Fast track' listing, less stringent regulatory and reporting requirements for companies = possibility for greater investment risk to non-institutional investors.
- Decreased transparency as to the financial health of companies listed gives a lesser indication of their true profitability.
Bio:
Nicholas Pascal is the in-house copywriter with Everest Forex and has been trading currencies since he was a teenager. He has freelanced and been a consultant for a number of firms specializing in forex, and encourages the uninitiated to get involved in this democratic and empowering market.
Filed under Blog by JamesW
del.icio.us Digg Furl Reddit Ask blogmarks Google Netscape Socializer StumbleUpon Technorati Windows Live Yahoo! Help
Permalink• Print• Email• CommentRelated EntriesTrading Forex Using A Currency ETF (Exchange Traded Fund)My Most Profitable Week EverTradeKing ReviewWall Street Survivor GameWeekly Trading Update - 17-21 October 2011Leave a CommentName (required):
Email (required):
Web site:
4 Free Trading Videos From INO TV
10 Free Trading Lessons From Adam Hewison
------------------------------------
Copyright 2012Privacy Policy|Terms Of Service|About|Contact
Automated Forex Signals:ZuluTrade
Free automated trading service that allows you to trade the signals of over 1200 different signal providers. Once you've chosen your providers, the signals are then executed automatically in your account. Free demo accounts are available for testing purposes.
Click here to find out more.
Recent PostsMy Most Popular Posts Of 2011 A Review Of The Forex Markets In 2011 How To Predict 5 Day Trends (With Updated Performance Results) IG Index Reduces Spreads On Forex Pairs Are The Signal Providers On ZuluTrade About To Become A Lot More Profitable? Stay UpdatedRSS Feed
HelpPopular LinksADVFN ReviewBest Forex Trading SignalsCashBackForex ReviewCollective2 ReviewCurrency Trading For Dummies ReviewFAP Turbo ReviewForex Avenger ReviewForex BrokersForex Candlesticks Made Easy ReviewForex CourseForex Currency TradingForex EducationForex Income Engine Trade Alert Software ReviewForex Morning Trade ReviewForex Nitty Gritty ReviewForex Power Group ReviewForex Profit Accelerator Trade Alert Software ReviewForex Profit Multiplier ReviewForex SystemsForex Trading Machine ReviewForex Trading Made EZ ReviewForex Trading ServicesMarketclub ReviewPortfolio Prophet ReviewStock Market InvestorStocks And OptionsStock Trading Nitty Gritty ReviewSurefire Trading Challenge ReviewTradefair ReviewTradeKing ReviewZecco ReviewZuluTrade ReviewCategoriesBlogArchivesDecember 2011November 2011October 2011September 2011August 2011July 2011June 2011May 2011April 2011March 2011February 2011January 2011December 2010November 2010October 2010September 2010July 2010June 2010May 2010April 2010March 2010February 2010January 2010December 2009November 2009October 2009September 2009August 2009July 2009June 2009May 2009April 2009March 2009February 2009January 2009December 2008November 2008October 2008September 2008August 2008July 2008June 2008May 2008April 2008March 2008February 2008January 2008November 2007October 2007DisclaimerThe information contained on this website should be used for educational purposes only and does not constitute financial advice.
Forex trading carries a substantial risk and may not be suitable for everyone. If using leverage, you can lose more than your initial deposit.
Earnings DisclosureThe author of this website may have an affiliate relationship with certain companies, and may receive a commission for linking to certain products that subsequently result in a sale.
No comments:
Post a Comment