Joe:
Very much appreciate you`re knowledge and curtsy. Wow, just like that, in one sentence you answered an 8 years nagging question.
I believe you, but for a layman (for my understanding) trading is trading. ALL trading should be zero sum. Why does trading STOCKS/BONDS have better odds? Why is it different? I don`t get it, .
Hi Khairye. I hope you got my response to the pm you sent me. So, I don't have a lot of experience on this as at the moment is a hobby with hopes to become another income in the future (that's why I'm learning and sharing here when I know the answer to something). My view is that you cannot do this if you don't like it a bit. It may be really boring, but it has some cool stuffs to. The thing here is, you are moving money, so a mistake is going tu hurt your wallet and/or your future if you are gambling your savings and you are not thinking before you act.
Forex and the Stock market are indeed different markets with different goals. In Forex (Foreign Exchange), you trade currency in pairs. You are buying/selling dollars, euros, pounds, etc, and they are valued relatively to others (USD/EUR, USD/YPY, GBP/USD, etc). That's mostly the description. So, you sell when your currency is up relatively to another, and you buy when is cheap. It is a market that moves trillions, is highly sensitive to political events, speculation, economic new, etc. The variations are small so need to put some money to make a difference. You need to understand a lot of world economic, how countries are managed, all related to the currencies you will trade.
The stock market is different because there are many instruments that behave differently and have other goals. You can do the same (buy/sell, obtain gains or losses) doing day trading, or you can hold those for the future. You cannot do this in forex because that's not the goal. Lets put some examples regarding the US market (you have a lot of markets to trade, NYSE, Nasdaq, london, tokyo, frankfurt, etc).
Bonds: Is a piece of paper (not anymore, it's all virtual) that says: "I'm worth XXX dollars that will be paid on XX/XX/XXXX. During that time, I will pay an interest of xx% every x months". Depending the issuer, the rate/conditions/probability of not getting paid. For example, you may find bonds from the US Treasury, an State, a private company. Once the initial offer is completed, they can be traded in the secondary market. You may have one that is trading today at 100 USD, it goes up at 110 USD and you sell it to have that profit. If you want, you can do this all day with the variations and do the same as forex.
Stocks: Imagine a company being divided into multiple pieces, like.. a million of them. They say, every piece will trade (IPO, Initial Public Offering) at 20 USD. They go, they collect that money like the bond, and then you can buy or sell the stock depending on how well/poor the company is doing. They need to present quarterly balances to show how they are doing, if you have enough stocks you can actually run the company, have someone in the board of directors, etc. If they make large profits, the can share this with the stockholders. This is known as dividends. Of course, you can sell/buy and profit for the difference between them, or just keep it and sell it years later at a higher price (if the company has grown).
You have more instruments like mutual funds, etfs, options, futures, etc. Every one of them becomes more complicated with their own behavior.. you may want to just buy/sell them, or have another strategy (like buying for the long run/retirement). There are millions of book/videos/sites regarding this, so you just need to read regarding this and see if you find it interesting and what to be part of that world.
In my experience, seeing how argentina was doing (and I was right at least so far) and other personal experiences, showed me that I needed to act. I started to become more aware of the need of protecting my money to stop losing due to inflation, devaluation, etc. Having in a future savings if I need them for something (medical bills, buying a house, launching a full scale attack to my enemies (?), getting fired), or just for retirement. I then started to read about argentina's economy, what do reserves mean, why we have inflation, how can I protect my hard-earned money, etc.
I don't know if this is what you were looking for. I do hope this will shed some light on your questions. If something doesnt make sense just let me know, as you may have noticed from my writing, I'm not a native speaker so sometimes I have a way of expressing myself that is not the way I want to.
Regards,
Chris
