Discover key obstacles for profitable stock trading via Forex tools

Forex has been around for decades, and it is widely popular across the world. However, currencies are not the only money-making instrument. Through international brokers, clients in South Africa may also trade stocks of the largest brands. Discover the main challenges in this realm.

Digital terminals for currency exchange allow users to add other instruments, including stocks. Here are key challenges faced by rookies in stock trading.

Transitioning to Stocks

Many currency traders develop diversified investment portfolios. By adding stocks and derivatives, they lower their overall risks and boost potential returns. Getting started with equity trading is not easy: it requires thoughtful preparation and sufficient knowledge of an entirely different market.

Although currencies and socks are often traded using the same digital tools, they have little in common. The value of a national currency depends on a wide range of political and economic factors, from interest rates and trade balance to diplomatic tensions. Stocks, on the other hand, rely on factors like revenue or balance sheet predictions for a certain company, in addition to the respective economy overall.

Stocks or CFDs?

Global brokerage brands like FXTM provide two ways to benefit from the stock market: stock trading and CFD trading. In the first case, you buy shares issued by the biggest companies worldwide. In the second scenario, no equity is purchased: instead, you speculate on stock prices alone.

On the stock exchange, players are classified as investors or traders based on their strategy. A trader aims to benefit from short-term price dynamics: they may buy stock while it is cheap and sell it back after a price hike. Investors, on the other hand, take a long view: they hold on to their assets for extended periods to capitalize on long-term trends.

Top brokerage firms provide a real-time connection to NYSE and NASDAQ, the biggest exchanges on the globe. Through their trading tools, you may buy stocks issued by Microsoft, Apple, Facebook, Alphabet, and other giants. Stocks from tech corporations, known as ‘growth stocks’, are one of the most popular choices: the global demand for their services is growing all the time.

Key Barriers to Success

Here are a few of the most common obstacles. In trading, like in many other occupations, your mindset could hold you back from achieving real highs. Traders who venture out into the stock market may fail due to the following shortcomings.

1.   Laziness

Do not expect to make a spectacular profit from a few hours of trading stocks. Impressive returns come to those who are patient and able to follow consistent strategies. Successful players prepare for every trading day by analysing the markets and reviewing their own performance.

2.   Irrationality

The archenemy of every stock trader is emotions. In times of crisis, it is easy to panic, feel scared, and make impulsive mistakes as a consequence. On the other hand, ungrounded optimism can be just as detrimental. It is challenging to control such feelings, but they must be curbed if you want consistent profits.

3.   Slow Information

The equity market reacts to global events incredibly quickly. Just think of the COVID-19 outbreak, which caused a dramatic collapse. In this day and age, print media are a relic of the past, and news must be monitored in real-time. A delay will cause you to miss lucrative opportunities. Fortunately, advanced trading terminals like MetaTrader 5 have features that deliver all the relevant data and forecasts as they come.

4.   Weak Analytical Skills

By analysing patterns, you can identify the most favourable entry and exit points. For instance, the volume of a stock reflects the interest in the asset. If it is growing, the price is likely to go up. This means the market is on the rise.

Use technical analysis to spot the best time and price for your trades. Basically, many of the strategies that work on Forex may be successfully applied to stocks. This includes the breakout strategy and the moving average crossover.

5.   Money Is Your Only Goal

Even though trading is done for profit, your real goal should be consistency. This will help you stay focused and hone your skills even in the least favourable times. Stock trading pros are interested in the profession, and they perceive their activity as art. Master it, and let the money follow.

The Bottom Line

There are two ways to profit from corporate stocks through Forex platforms: trade stocks or CFDs. In the first case, you own a percentage of the company that issued your instrument. Alternatively, you may purchase a contract with the broker on the subject of the stock price. In this case, there is no need to own the underlying asset. To succeed, traders need a quick reaction, knowledge of the trends, persistence, and a consistent strategy.

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3 years ago

For me, stock or contract per difference [CDF] is not good option. the stock close for retail traders after working hours while still open for big insitutitions. most of time you open a new day of trading you find gaps because while market was closed for individual traders, big companies, investment portifolios were still trading. forex is the best option, it is open to everyone 24hrs and news [economic news or reserve bank interest rate decisions] is recieved at the same time by all traders, whether big banks or retail [individual] traders. and in forex the volume is huge, and… Read more »

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