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In Finland, buying stocks is recommended for practically everyone from the age of 18 and up. Over the long term, stocks have provided good returns on investments. Currency trading, also known as forex trading, is another method of trading that has been available on the market for a long time. In forex trading, the primary goal is to anticipate the rise and fall of different countries' currencies.

 

What you should know about forex trading

The name Forex is familiar to many Finns, but relatively few truly understand how currency trading on the Forex markets operates. Currency trading is based on the exchange rates between different currencies. It is the world's largest and most liquid market, with daily trading volumes exceeding 5 billion euros.

Forex markets operate around the clock, five days a week, offering flexibility to investors. There are many online trading platforms available, and investors should always research different sites before choosing a platform. One reliable and regulated trading platform is AvaTrade, which provides investors with comprehensive information and professional reviews, covering all the opportunities that Forex offers.

A key advantage of the Forex market is leverage, which allows the management of large positions with relatively small capital. This can lead to significant profits but also substantial losses. Therefore, risk management is paramount, and it is advisable to start trading with moderate amounts. Only when trading becomes fully familiar should larger amounts be invested to aim for greater profits.

 

Strengths of stock trading

Stock trading is continuously recommended to Finns. As economists Aki Kangasharju and Juhana Vartiainen have often noted, investing in stocks is a good way to grow wealth and hedge against inflation. Stocks offer investors the opportunity to own part of a company and benefit from its financial success through dividends and price appreciation. Stock markets are open only at specific times, which limits trading hours compared to Forex markets.

Stock trading is generally less volatile than Forex trading and can offer a more stable investment option in the long term. Stock prices often reflect a company's financial performance and the overall state of the market, giving investors more opportunities to analyse the value of a stock and make decisions regarding their investment portfolio.

 

Forex vs. stocks

The biggest advantage of currency trading is its liquidity and trading flexibility. Investors looking for quick profits and wanting to take advantage of short-term market movements might find Forex trading attractive. However, the high volatility of Forex markets can also lead to significant losses, so it is advisable for investors to start trading with small amounts.

Stock trading might be a better option for those seeking more stable and long-term investments. Stock price movements are also more analysable than currency movements. A key benefit of stock investing is also dividends, which have been commendable in recent years, for example, from Nordea. Many invest in stocks instead of funds precisely in the hope of large dividends.

Both currency trading and stock trading offer different advantages and challenges. Forex trading can be a good method, especially for those motivated primarily by quick profits and easy trading. Success in this area is best learned over time and by making small investments. Stock trading also involves risks, as seen in recent years with the bankruptcies of construction companies, but investing in stocks can provide more predictable returns in the long run.

 

HT

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The information provided in this article is for informational purposes only and does not constitute financial advice. This publication or the authors are not financial advisors, and you should consult with a qualified financial professional before making any investment decisions. Investing in stocks, currencies, or other financial instruments involves risks, and past performance is not indicative of future results.

 

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