Is Trading Forex or Commodities Better?

Before you can answer the question is trading Forex or commodities better, you must have a firm understanding of what each of these investments entail. First, let’s take a look at Forex, which is an abbreviation for foreign exchange. Forex is different from the regular stock market because it is open 24 hours a day, five days a week. When trading Forex, you are exchanging one country’s currency for another. This type of investing requires information about the ups and downs of the finances of a country. There are a variety of things that can impact the worth of a currency, such as political changes, natural disasters, tourism and much more.

Commodities can be defined as goods and resources that come from the earth. This can include precious metals like gold and silver, food such as wheat, corn, coffee and oranges, oil, even livestock. Experienced investors can make a lot of money investing in commodities without a large investment. However, the keyword here is experienced, because commodity investing carries a high level of risk. Financial professionals do not recommend beginners to try commodity investing. However when using the services of a broker who is experienced in commodities, the returns can be substantial.

One thing you should know is that commodities are bought and sold on speculation. An example would be if an investor thought a storm would destroy orange groves in Florida, you would tell your broker to buy as many oranges as they could. If your speculation about the oranges being destroyed came true, the price of oranges would rise substantially and you would make money because the surviving crop would be more expensive. This sounds easy enough, but any investment professional will tell you that commodity investing is definitely a risk, a gamble that may lose money rather than make money.

Both Forex and commodities are risky. It takes substantial knowledge about the type of investing you are doing to be successful, and even then there are no guarantees you will make money. When it comes to deciding which investment type is best, there are no right or wrong answers. Every investor is different. It all depends on the knowledge you have and which area you feel most comfortable with. If you are not sure, employ the services of an investment firm who is experienced in both Forex and commodities, there are no rules that say you cannot try both. This could be a way for you to decide where you want to focus your attention.

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