Why the stock market is the easiest market to trade

Buy and hold is investing, not trading. Companies can manipulate numbers, has it ever happened? Ohhh I don't know.. Shorting is harder, uptick rule... Do you even trade bro?

I'll add one more thing though.. Stocks have an order book, big plus to short term traders, but so do commodities...

The stock market wasn't created to trade, trading started in the 70's and 80's with the creation of junk bonds. The stock market was created for companies to raise money by giving a portion of the company to shareholders in exchange for capital. Trading and speculating in the stock market is a guessing game as with forex. I have invested in the stock market for 10 years, I buy and hold for years and base my research on fundamentals. Forex is a technical game. The stock market is profitable over the long run if you buy and hold great companies like Coca Cola, Berkshire Hathaway or Visa. They aren't going anywhere even if something crazy happens to the stock and it drops 20% I would buy because I know over the long run it will return to its previous high.

I'm having a hard time with forex lately and it seems the Emini stock market futures (es,nq) treat me way better.

But the truth is it comes down to understanding/getting the overall trend or lack of trend right. Once you have that, it's near impossible to lose at trading anything.


ES/NQ/TF/YM seem to support technicals more than forex from what I can tell. I don't know, maybe I'm just biased right now and delusional, but that's what I'm seeing.

Yes, it is, thank you for the comment. I additionally want to thank all other contributors. I DO understand the urge and necessity for some to trade FX and I wish them well.

The great days were really when the james16 senior guys could lead some serious learning people to success - and thus guiding them through this totally exhausting MT4 indicator yes/no, trading system vendor yes/no, FX robot yes/no, indicator yes/no.... to some profits.

Little did we know back then that the very structure of volume and intraday volatility in Forex would drop in such significant terms.

Either way I wish all of you success.

M.

Thought it was Bruce Lee. The inspiration can be found in Taoist teaching. Different words, the very same idea. And it seems you have found your own way of being like water by moving to happier markets.

Thank you and best wishes of success to you too,
vox

Very good article at Reuters explaining ( in much better English ) what I was trying to say in my posts.

http://http://www.reuters.com/articl...0NW0ER20140512

So what are the choices ?

1. Hope for the return of liquidity and renewed interest in Forex.

Examples I see : websites such as FXstreet, FXCM`s DailyFX, but just as well smaller retail trader´s educational websites such as Nial Fuller or TheForexGuy will probably still HOPE or try to hang on, some ( not all ) telling their clients that the low volatility is just a temporary or cyclical phenomenon.

2. Adapt to changes in the market by
a) expecting a lower ROI%
b) keep your day job
c) hate me, curse me, tell my I am wrong.....but still keep your day job
d) don´t invest so much in FX " only " related products.
e) shift your focus more on Indices like E-minis, FTSE, DAX, CAC40, NIKKEI - since they are backed by REAL companies producing REAL products, there will always be some demand and supply, thus creating a natural ebb and flow for their representing indices.
f) shift your focus to commodities like corn, wheat, cotton, cocoa, coffee, sugar ( again : REAL products in demand all over the world )
g) shift your focus to highly traded tech and social media stocks ( Apple has often exactly the type of intraday movement that is still expected in the FX majors by some FX " only " traders. )
h) look at the ETF`s, they are here to stay. If you are used to see a currency representing the economy of a country, you should easily be able to see the trade advantage of investing in country ETF`s, sector ETF`s, index ETF`s and so forth.
i) see the advantage in Internet based trading in general. Platforms are still getting better and a lot is cheaper ( for instance computer hardware ). Trading has simply shifted to a more regulated and calmer environment. It is not the end of the world.

3. And lastly : 30% after taxes per year for 10 years is still a decent amount and more than enough for most people.

Websites and Blogs such as http://becomingminimalist.com can additionally help in restructuring your beliefs.

Good luck and good trading !

M.

Hi. I have been thinking about the same question recently. Are stock prices easier to predict than currency prices? I think they are. People above have given some good arguments for that. But I want to add another argument in support of stocks. It is this: there are less different types of people/institutions buying stocks than there are types of people/institutions buying currencies. Let's think about who might buy or sell currencies. There are speculators who want to earn from price movements, carry investors who want to collect the "dividend", corporations who need currency to buy some product, investors who need currency to buy foreign stocks or bonds, and finally central banks who want to manipulate their currency. Now let's think about who might buy stocks. There are also speculators, dividend investors, and that's about it. Sometimes, corporations buy back their own stocks, but that seems to be an exception not a rule. Also, central banks sometimes buy the stocks of their own country (Japanese central bank is doing that, I understand), but that is also not a common thing. So basically, the stock market has less conflicting interest groups, compared to forex market - that should make stock prices easier to predict. If my logic is not correct, then please tell.

Good post, thanks Louisa ! It believe it depends on your timeframe and your expectations. If you trade weekly and daily charts in FX, it depends very much on your understanding of macroeconomics and requires good timing. If you simply open your chart program and watch on a 1hr, 4hr or 30min a FX chart, and compare this to a stock chart on the same timeframes, it becomes immediately obvious which one is easier. A few years ago - in the golden age of manual FX trading - you could join an intraday trend and there was good trending follow through to targets. Nowadays computer algos are " trading " FX and you can see how it oscillates at an extreme micro level at split seconds. Although for a private trader not much is really happening in terms of a daily range ( see EURUSD for instance ), large institutions, banks, hedge funds and computer programs are profiting from this extremely fast fluctuation. As there is leverage involved, profits are still made.

However, a company has earnings data, volume, time and sales data, the order book etc. Besides a smaller number of options traders, there are actually big institutions buying stocks with the goal of HOLDING.

In my experience this is more transparent. Additionally, I see a growing risk in trading FX, as more central banks create QE programs and other central banks have to struggle with their currency pegs ( like the Swiss central bank ), sudden shifts ( external shock factors ) can harm a trader using leverage much more than a trader like me, who trades real value stocks and Indices ( the latter on a weekly timeframe ).

Just think of all those traders who went long EURCHF based on the premise that the currency peg would hold ? Their accounts were wiped out and it is possible that some of them even OWE money to their brokers.

This is why a FX or CFD broker is required to state on their website : " losses can exceeed your deposits ".

All very well if you trade with a 2000 K account with 50:1 leverage ( although painful ). What if you trade for your family and retirement with a 300 000 K account, only to see your account being wiped out in seconds because the stops don`t work anymore - or you even have to add funds and lose your home ?

Hope that helps.

Why the stock markets is easiest to trade? This is simple. Only buy dips, never go short. Works almost all the time.

When the markets finally turn down or crash it is quite easy to spot and if stops are in place you lose a little but nothing compared to wins you made earlier. Markets normally go down quite a short period compared to how long they go up so it is easy to say that just buying dips or staying out you really can't lose money.

I do disagree, every market its is own beast and they should be treated separately. Just as commodities and options markets there is a trader for each one of them, it just depends what your comfort level is and what you want to trade.

Well. Let's first define what "easy" means. In my opinion, what you are trading (stock, fx, futures, etc.) is totally irrelevant since everything has a price and it goes up or down based on supply/demand. So, we need to talk about what makes a product "difficult" to trade. I think we can all agree that VOLATILITY (and leverage which creates volatility inside your trading account) is what makes something "easy" or "difficult" to trade. Everything boils down to the volatility of the underlying product you are trading. Stocks have a wide range of volatility but have a low level of leverage. So, the "easiest" trade would be a low volatility stock trade with 1:1 leverage. Once you add in 2:1 or 4:1 leverage into stocks, they become more "difficult" as they can create problems in your account, especially if you over leveraged yourself.

Stock Market has most investors fooled just like the penny stock salesmen.


Bull up the Stairs
Bear out the Window

Bears Take the Money & The Bull Get the Bag

Please do not forget all the 401k Bag holders after 08... That money went somewhere, likely to the guys boosting the market(FED?)

Although I must say there is a massive advantage in buying Index Funds as they have an inherent nature to rise. If you can hold trades for 10-20 Years, Longing the stock market is a safe bet, unfortunately most people do not have the capital to do this in a very profitable manner.

I want to wake up this thread again because I asked myself exactly this question today after some years of forex trading. I am trading (fundamentally, exploiting inefficiencies, inter-exchange-arbitrage, technically, rumors...) for 15+ years now. But many things which worked in the past do not work anymore and so my focus is mainly on technical trading now. Unfortunately, it doesn't work as good as it should. But however, I don't want to speak about me.

By the way, Msmarple, awesome postings! I really enjoyed reading it.

In my opinion trading stocks is easier because support and resistance levels are much more respected than the levels in the forex markets where huge spikes / false breakouts are very common. I can't count how often some "big players" stopped me out on the cable even the level I traded off was well respected before. Today I have a bit more luck (for the moment) and my short trade is still running... But however, this is what I believe but I haven't traded stocks for a while and so I might be wrong but I reckon there are not so many stop hunters in the stock markets than in forex.

What do you think?

The stockmarket is the easiest market to trade.

ASX200 down 100 points after RBA cuts interest rates by 0.25pct

Australian Superannuants will take a hit .

A double blow for the retirees in 24 hours

Because equities are more volatile and hedge funds don't employ high leverage.

Ok are we in a dip or a crash zone now ?

The crash of 1929 the punters were saying the same thing

oh you silly boy fx is highly highly manipulated in the way price moves.

I will give my 2 cents (my opinion form my experience).
There is no market manipulated like the equity market, if anyone states otherwise they have not traded all the markets for
a good period of time.
Please do not fool yourself. Pumps and dumps and the whole market itself is manipulated by the 'SPECIALISTS" ... every single day.
I stared trading the equities 20 years ago and about 8 years ago I started trading the FX also.
It is way easier to manipulate a stock than an fx pair, let alone if you keep overnight you might wake up to a crazy gap in you stock.
You are going to tell me ..... look what happen to the CHF a while ago..... well in stocks you will get surprises like these more often. way more often.
The U.S. stock exchange trades 3 trillion a year the fx trades 4 trillion a day........manipulate.....
Of course EVERYTHING on this planet is manipulated.... the trick is to be able to recognize it and jump on the bandwagon, if you are a technical trader
you will see that. You can't hide the elephants. if you are a fundamental trader I feel sorry for you, not because you cannot pick the direction but because
a lot is lost when the fundamentals switch.
What is easier....well I think it depends on a lot of things.... what you like.... and what your brain can analyze better. Personally I love the fx market cause when I switched to forex all technical patterns where very easy to recognize, they jump to me I do not need to search, while my trading buddy could not and still cannot see them.
I can position trade the equities very easy, but do not like to hold overnights, so I day trade it every morning for 1 hour. For 1 hour to 2 the most at the open there is a lot of opportunity, "they move" they daily flavors.
But ..... in stocks you will need to be careful, not all daily flavors have the volume to trade big, cause you will be moving the market yourself.... so when the time is to get out(if you need to get out in a flash) good luck. Some have spreads at the open that are crazy witch you better know cause you will be eaten alive.
Whatever market you trade you better know what you are doing in that market, cause in the end "the other market" will always look better and easier.
One more thing, to learn the markets(not talking about trading alone), it does not take 2-3 or 4 years of playing with technical indicators...it takes a lot of love, persistence and a never give up attitude till it clicks in there head witch for some might never come.
It does not matter witch market you trade...buy where no one buys and sell where no one sells.... cause all the retail world is doing to opposite, that is why most lose.

4x

I want to thank everyone for their posts, I agree that both markets are manipulated and you better know what you are doing.

Experiment 1 :

Have a 1 hour and 15 min chart open of Apple or Google. Next to that open a GBPUSD 1 hour / 15 min chart.

Watch all 4 charts for 1 week without doing anything.

Despite all of the " manipulation ", which one looks easier to trade, if your trade size per order is 20.000 USD ?

Which trade would be entered with REAL money, knowing that this comes from your family`s " nestegg " - many of them rather normal working employees or retired ?

It is your decision, I am just watching as the boss of your trading desk.

You have all my encouragement and wishes of good luck - but if you consistently lose, you are out.

Experiment 2 :

Go to sites like GuruFocus or ValueLine.

Pick a stock that has real-time alerts for a) multiple Guru buys plus b) analyst recommendation, plus c) Insider buying.

Then watch this stock on a Daily, 60min and 15min chart for 2-3 days.

Parallel to this go to sites like DailyFX, Ashraflaidi or any other reputable FX analyst site.

Pick a major pair like GBPUSD etc., watch this on Daily, 60 min and 15 min.

You are allowed to trade 1 trade this week, which one would you choose, which one is easier for your guts, nervous system and requires less stress ?

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Do both of these experiments multiple times.

If your results are fine with FX, trade FX.

If your results are fine with stocks, trade stocks.

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Either way, good luck !

M.