What to choose for trading – stocks, currencies or options.

Choosing the right trading instrument is one of the most difficult tasks to solve before starting stock trading.

Modern dealing centers offer their clients a vast selection of different trading instruments. Therefore, choosing the right one can be quite challenging for a beginning trader.

Let's compare the advantages and disadvantages of three of the most common assets commonly used in stock trading.

Currencies – trading is conducted using so-called currency pairs; several types of market analysis are used to forecast exchange rates.

The main advantage of currency trading is the abundance of information available on the subject. Online, you can find everything from simple Forex recommendations to a wealth of free literature and videos, as well as automated trading options.

Leverage is also available, allowing you to increase your trading volumes to truly enormous levels. And with luck, you can earn a decent amount in just a few days.

You can start trading with just a few dollars, gradually increasing your deposit.

The main disadvantage of currency trading is the difficulty of predicting exchange rates; you need to catch a trend, and there's no guarantee it will last.

Stock trading – when it comes to real trading, as opposed to what you find in most trading terminals – is a more relaxed and measured process. To do this, you need to contact your bank and submit a request to purchase a certain number of shares, after which the purchase will be recorded in your name.

Leverage isn't used , so your profits won't be very large, but you'll only lose everything if the company whose shares you bought goes bankrupt.

The advantage is relatively relaxed trading and its simplicity: if you buy shares at the right moment, you simply wait for them to rise and sell them at a better price.

The disadvantages include low profitability: shares rarely rise more than 10% per year, but they can fall by as much as 50%. The initial deposit is high, typically starting at $1,000.

Options are a type of stock trading, but unlike the other two, trading here is conducted using a very simplified process.

To open a trade, you simply predict how the exchange rate (currency or stock) will move in the near future. For example, if the dollar will depreciate against the euro in an hour, the bet amount is $10. If the forecast is confirmed within an hour, you receive $7.50 in profit; otherwise, you only receive $1.50.

The main advantage of this type of trading is the elimination of psychological pressure. You've made a forecast and all you have to do is monitor its outcome, but there's no option to close a trade prematurely. After all, prematurely closing orders on Forex is sometimes the main cause of losses.

Unfortunately, this apparent simplicity conceals a certain complexity: making an effective forecast requires the same analysis as in Forex.