Stock Trading Alternatives for Working People

For many people, the flow of their stock trading lives goes somewhat like this:
  • School - we hear about the stock market from our teachers, but we pay no attention to it, as we're too busy with our school work, and social activities.
  • University / college - most of us are working part time, and studying full time to support ourselves. We can barely afford the tuition fees, and can't spare the money to start stock trading yet.
  • First years at work - finally, we start earning some decent money, and may start playing around with the stock -market. Most people lose most or all of their initial trading capital at this stage.
  • Working life - now, we have started progressing through our career, and trying to impress our bosses. This involves picking up extra responsibilities at work, possibly working longer hours than the standard 9 - 5. At this point, we have saved up some money, and can start trading on the stock exchange. However, since most of us will be working in our day jobs when the stock market opens, we are limited to trading daily candles only. This requires a substantial amount of capital, and can be slow going.
stock trading desk
I don't want to appear pessimistic, but the reality is that once we become involved in our daily 9 - 5 jobs, professional stock trading becomes more unachievable. We do not have the luxury of monitoring the market during the day, and do not have the option of scalping the stock market. We can become swing traders, or long term investors. Even this, in itself can present a challenge, squeezing in some time during our busy working day to place our trades.

Don't get me wrong, stock trading is great. It is one of the most popular forms of investment options available for the everyday person. However, it's popularity and widespread acceptance can overshadow the other perfectly viable forms of trading.

One alternative to stock trading, is forex trading. Unlike the stock market, which is only open during business hours, the forex market is open 24 hours a day. People who cannot trade during business hours now have the option of trading in their spare time. This also allows trading on smaller time frames: 1 second, 1 minute, 5 mintues, 1 hour, 1 day.

Forex trading also makes it easier to short currencies. The stock market's basic trades involve buying a stock, waiting for it to go up, and then selling it later on. There is a bias towards buying stocks. It is harder to short stocks, as you have to look at CFDs, options, warrants...etc. These can get quite complicated, with their varying expiry dates, terms and conditions. Forex on the other hand is alot simpler. You can go long or short on any currency pair any time. That's it. There's no expiry dates or maturity dates.

Stock trading generally requires more capital than forex trading. A decent stock trading account requires at least $5000 capital, but is usually more towards the $20k+. This excessive amount is to ensure traders have enough capital for diversification, and to be able to trade more than a couple of stocks at the one time. Forex trading, with it's leverage only requires a few hundred dollars for a decent trading account, though accounts of $1 are also allowed.

One of the most persuasive arguments in my mind for forex, is that you generally cannot go into debt. You make a mistake, you receive a margin call, and you've lost your initial capital. Stock trading on the other hand can be extremely dangerous if you make a mistake. Especially trading CFDs without a stop loss. In stock trading, you can lose all your initial capital, and then get into debt with your broker. That's a scary thought.

The forex market may not be suitable for everyone. However, I encourage you to do some research on it, and seriously consider it as another option for building wealth.