Day traders who are looking for profitable investments have many options. A day trader is not limited to stocks. They can also invest in Forex and Futures. We will first explore the differences between stocks, Forex, and futures, read here.
Aspects of Stocks
The stock is a guarantee of ownership. A stock is also the right of ownership in a corporation.
All public companies issue shares.
The broker must receive a commission, even though there isn’t a provision for it. The stock market is regulated by securities regulators in every country. They control the stock exchanges. These regulators have to answer to them. Different liquidity levels are available.
The trader must pay taxes on their stocks. The trader is able to choose whether they want to pay short or long term taxes. Stocks are the only financial instrument that allows you to get dividends. In terms of the relative ease in which you can make a short sale, results differ between stocks. However, going long will always be easier.
Aspects of Futures
A futures contract is an agreement between two parties to sell or buy assets at a certain price. The asset will be delivered first and the payment made later.
In a contract for futures, you can find shares and commodities.
The most well known commodities are metals and grains. In every significant region, there is a futures trading regulatory body.
You can use leverage. There are different liquidities for futures. For tax purposes, 60 % of all gains regardless of their holding period are considered to be long term gains. 40 % of them are classified as short term gains.
The futures market does not offer dividends. With futures it’s easy to trade short.
Forex – Attributes
Foreign exchange trading (FX) is the international trade in national currencies that takes place on a globally decentralized marketplace. Trades are conducted in currency pairs.
EURUSD and USDJPY include two of the most well-known currencies pairs.
FX trading is not complete without leverage.
No broker commissions exist. The spread (the difference between the selling and buying price of an underlying asset) must still be paid to the brokers. Even though FX is global, it does not have a central authority that regulates the market. Securities regulators, however, are of a regional character and world regulation is split into RMs. Some markets have a stricter regulation than others.