Basics

The Relation Between Forex and Stocks


Unlike stocks which represent ownership in an underlying asset, foreign exchange (forex or fx) is the exchanging of one currency for another, at a specific exchange rate. And each major country is represented by its currency or fx symbol, which is like the stock of that particular economy.

When a large company considers itself mature enough it offers its stocks publicly, it will become listed on a national exchange house, such as the New York Stock Exchange (NYSE) and Nasdaq. Once a company is publicly-traded, anyone with a brokerage account can buy and sell shares in that company’s stock.

Stocks market

Pubic stocks convey a form of ownership of a company, where given enough trading volume you can cash-out your stocks and receive either more or less than what your investment cost.

Finally, if you hold certain stocks for enough time, you can earn dividends, as companies return a portion of the revenue back to its stock holders. Some of the biggest companies in the world are publicly-traded.

Among the main national stock exchanges worldwide, we can mention the Chicago Board of Trade (CBOT), Chicago Mercantile Exchange (CME), Intercontinental Exchange Europe (ICE), Australian Securities Exchange (ASX), Eurex Frankfurt AG (EUREX), Hong Kong Exchanges and Clearing (HKEX), and the Singapore Exchange (SGX).

These exchanges combine the sum of their stocks to compute an index value. For example, we can reference the E-mini Dow Jones, E-mini Nasdaq 100, E-mini S&P500, AEX, ASX200, CAC40, DAX, EuroStoxx50, FTSE100, Hang Seng, MSCI Singapore, Nikkei225, and Russell2000. The value of those indexes are used to make price projections, including technical analysis.

Comparing stocks to forex

The forex market is decentralized and has fewer barriers to entry and is available twenty-four hours a day for trading, compared to conventional stock market trading which opens in the morning and closes in the afternoon.

Forex and Stocks trading hours

In addition, it is easier to deal with forex pairs, compared to having to select from among thousands of stocks. Forex trading can be focused on the most liquid and heavily-traded currency pairs, such as the EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, NZD/USD, AUD/USD, among other popular pairs. There are around 28 forex pairs which consists of 80% of all trading volume.

There are also certain forex pairs that complement the local national stock exchange index.

For example, in Oanda.com there are tradeable indexes like US Wall St 30, US Nas 100, US SPX 500, UK 10,; Germany 30, Japan 225, Hong Kong 33, Netherlands 25, France 40, Europe 50, US Russ 2000, Australia 200, Singapore 30 (SGX30/SGD), India 50, China A50, and Taiwan Index.

If you look at a chart of the three major US stock indices, including US Wall St 30, US Nas 100, US SPX 500., over the lasts ten years, it is very clear that all three of them were in a “bull” market since March 2009.

Over that time frame, you can also see that the volume increases significantly.

There is an intrinsic relation between stocks and forex, so you must be aware of both to be successful in earning money. What Wiseinvest does is put a finely crafted trading system powered by Artificial Intelligence (AI) to monitor all the opportunities for the 28 most traded pairs in the forex market. You can trade automated with AI trading in partner brokers or manually with AI signals by just copying each signal into your brokerage account, to follow our trading system’s performance. All AI trades are sent for you by email and telegram in real-time.

A very important difference between stocks and forex pairs is that stocks can provide passive earning that come from dividends. This doesn’t happen with forex pairs (except for certain carry-trades), where you must reverse your position to realize the profits. That’s why it is so important to have a trading system powered by AI to complement your trading, by trading automated or receiving signals for when to go in and out.

We believe in education as a fundament to proper risk management in trading forex or stocks.

Every year the complexity of financial markets increases, and it is very important keep well informed. The best traders are always acquiring new content on the internet and using  AI-based systems and portals with the state-of-art technology. Wiseinvest was designed to supply the best content in the market and deliver institutional-grade trading signals to our subscribers.

The best way to trade forex

You can trade forex automated with AI-Trading in a seamless way. Check out the 3 following steps:

 

automated trading with ai bot

 

Don’t you have a broker account yet? Our AI is integrated to trade automated with the broker Oanda. Click here to open an account.

With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account and you can monitor the AI trading performance directly on our dashboard.

You can trade forex with our free forex signals clicking here, or with our Premium subscription that provides you unlimited AI signals and automated AI trading in partner brokers. Whether you are a beginner or a Professional forex trader, our AI trading system can help you save time and improve your trading performance. Get started with free AI.

When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate pips or change the leverage in your forex broker account. Learn more about leverage in forex trading clicking here.

Takeaways

  • There is an intrinsic relation between stocks and forex, and a good set of forex pairs related to stock indexes.
  • Forex pairs can be a better investment opportunities because you can earn money in both directions of the market.

Wiseinvest Artificial Intelligence can help you to identify more market opportunities and diversify your forex trading.

Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.

The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. The forex broker Fxcm warns that 69.66% of retail forex traders lose money trading CFDs.

The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.