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When it comes time to invest your money - whether it is for your own retirement or so your kids can go to college - you will want to know what investment will give you the biggest bang for your buck. Of course, it's also very important to get an investment that is fairly safe - one where you won't be likely to lose money. 1. Stocks Stocks relate to individual companies. Companies allow the purchase of stocks during times of growth. Stock represents a partial ownership of the company and also entitles you to be able to vote on important decisions the company may face. Stocks will appreciate in value when a company does well for itself, and fall when a company fails. If the value goes up, companies usually issue dividends to their shareholders in the form of cold hard cash or even more stocks in the company. 2. The Stock Exchange There are several places of exchange in the world, the most common being the American stock exchange(NYSE and NASDAQ). Most stocks are only listed on one exchange, although large companies may have listings on much more. 3. Short VS Long Term Investing For quite a long time, stocks were percieved as long term investments. So called blue chip stocks - those having proven value over many years - may form the backbone of an investment portfolio. Short term trading is a relatively new phenomenon made possible with the advent of Internet trading. Day traders attempt to take advantage of large daily fluctuations in the market by buying and selling many times in one trading period. It is in actuality quite risky and you also have to factor in that for every transaction done some brokers charge as much as ten dollars. 4. FOREX The stock exchange is significantly a different animal as compared with FOREX. FOREX is generally known as the Foreign Exchange Market, and is primarily for short term investing. Most traders enter and exit deals within a 24 hour period - sometimes within a few minutes. Many FOREX trades can be made in one day without building up a large brokerage fee because FOREX trades are commission free. Brokers will make money on each trade. 5. A Huge Market As the largest financial trading market in the world, FOREX handles transactions worth $1.5 trillion every day. By comparison, all the American stock exchanges combined handle daily transactions worth about $100 billion. The huge volume of FOREX means that it is one of the most liquid markets in the world. There is always a buyer and seller for any type of currency because the world economy relies on the movement of goods from country to country. The stock market is less liquid because participants may choose to not sell their investments. 6. Difference In Trading Hours The stock echange is open for approximately 7 hours per day. In comparison, FOREX never closes. FOREX is also more predicatble than stocks - it follows well established trends. Plus in FOREX you can get started with a small amount of money - even as little as $250.
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