There is no hard or fast answer to the question of which is better. In the comparison of Forex vs. stocks, there will be benefits and drawbacks for each market. It ultimately comes down to how important those features are to you personally. Let's take a look at an overview of each market first, and then we can move on to drawing some conclusions about Forex vs. stock trading.
The Forex market is decentralized. It represents a trading network of participants from around the world. The large players in the Forex market include investment banks, central banks, hedge funds, and commercial companies.
The stock market is the overarching name given to the combined group of buyers and sellers of shares, or stocks. Shares in a company, as the name suggests, offer a share in the ownership. Usually, though not always, these transactions are conducted on stock exchanges. In order to raise capital, many companies choose to float shares of their stock.
Stock exchanges provide a transparent, regulated, and convenient marketplace for buyers to conduct business with sellers. Trading on these exchanges has historically been conducted by "open outcry," but the trend in recent years has been strongly toward electronic trading. The stock market is immensely popular, but it is exceeded in size by the Forex market, which is the largest financial market in the world. When we weigh up the Forex market vs the stock market in terms of size, Forex takes the round. Why do we care about the size? The greater the size of the Forex market, the greater its liquidity will be.
The Forex market is extremely liquid. This is a result of the vast number of participants involved in trading at any given time. Large, popular stocks can also be very liquid. Vodafone and Microsoft are prime examples. Though once you move away from the blue chips, stocks can become significantly less liquid.
The price of Microsoft (at the time of writing) is around $52 a share. The market spread might typically range anywhere from 2 cents to 5 cents for Microsoft in normal market conditions. This is a range of roughly 0.04% to 0.09%. Commission rates vary from broker to broker, but you might pay 10 cents per share. The commission is paid upon the opening and the closing of the trade.
Now let's compare that to EUR/USD. The most common type of retail FX trading is on a spread basis with no commission. This is the way in which the Trade.MT4 account works. On such an account, you might pay 1 pip of spread to trade EUR/USD, with no commission. If you are interested in trading with PROFIT EXPERTS, it's important to note there is a selection of account types available that offer a variety of services.
With EUR/USD trading at 1.1190, this is a round-trip transaction cost of 0.0001/1/1.1190. Want to know what that works out to as a percentage? It's less than 0.01%. In the case of this 'Forex vs stock market scenario', Forex has the upper hand. The round-trip spread cost of trading the FX position is less than the market spread on the share. And there's more: once you factor in the share commission, the FX trade is even more cost effective. You can also view real market prices with a Demo Trading Account, as well as a live account.