Quick Summary of the Differences Between Common Stock and FX Trading.
Definition:
Common Stock: Securities representing equity ownership in a corporation
FX: A foreign currency is a unit of exchange, facilitating the transfer of goods and services
It\\'s been a little over two monthes since I dived into FX trading (thanks 春桑 for opening another window of opportunity) and here is a brief summary of both lengthy literature review and numerous late-night model testing on 7 different demo accounts.
Compare with stock trading, FX has some fundamental, technical differences.
1. Fundamental difference:
Fundamentally speaking, buying a stock is buying a piece of ownership of the company, it\\'s like betting on the wellness of A company, be it MSFT, GOOG, or Enron… if the company do well, stock grows, people who bought the stock make money and vice versa. Now how do one know if a company \\'is doing well\\'? The only criteria of the WELLNESS of a company come from the company\\'s financial /accounting data which made public during the quarterly earning report.
One problem with this report is, in reality, there are so many ill-wished crooks that involved in accounting fraud (a.k.a. \\'Cook the book\\') these days and the bogus accounting data cause the huge lose of both institutional and individual investors. (Enron, worldCom.. came to mind), in another word, the investing public is NOT well informed, to say at least.
On the other side, buying a pair of foreign currency is more like \\"betting on the healthiness of the economy of that country\\", if the whole country does well, its currency will increase its value, hence, the investors make money. Again the healthiness of the economy of a country comes from the nations economical report/announcement such as NFP (Non farm payroll), CPI(Consumer Price Index report), interest rate, inflation...etc. it\\'s very hard that these data could be \\'skewed\\' by some evil-minded individuals.
In conclusion, FX is more valuable and tangible (bottom line is, it is REAL money, right?) than any common stocks which is less tangible because the nature of it is a \\'ownership of a company\\'. In other word, FX is superior in terms of value compare with stocks. | 
发表于 2006-9-2 16:43
