In my last post, I talked about how I was thinking my future lay in share trading rather than forex trading. Well after writing this post, I was kindly sent a guest post from Nicholas Pascal that discusses stock trading in some detail, and highlights the differences between trading FTSE 100 stocks and AIM stocks. I hope you find it useful.
I think it’s important to first point out that there isn’t much of a close correlation between market movements in stocks and forex. An artificial connection between the two has been forged since the early 1970s, which saw the end of the era of fixed exchange rates and brought with it a new breed of trader making connections between stock price and currency market behavior. Nevertheless, this makes it harder to apply an indicator.
On the other hand, there is more of a socio-economic link between forex and stocks . When there is a booming economy, the market is flooded with foreign investors buying stock, which brings with it a high volume of foreign currency which is good news for the market of that particular nation.
In this post, I want to discuss the pros and cons of trading stocks on the FTSE 100 Index versus the Alternative Investment Market (AIM).
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