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Stocks vs Forex vs Crypto

Hydelrabad: 15 November 2022: Now coming to some pros and cons of these three which will also highlight some similarities and differences between them.
1. Ease of starting business:
Starting crypto currency business is the easiest as it needs no paperwork to be done all you need is internet connection and install any of the crypto apps functioning in Pakistan, fill their requirements and you are good to go. Forex involves physical broker but its paper work is relatively easier than Stock Exchange where you have to go through a lot of paperwork (in relative terms) and it goes on increasing if you have to open an account with top brass brokerage houses like AKD Securities, Arif Habib, Askari etc as they have even more paper work in addition to mandatory and standardized paperwork from PSX.
2. Security, regulation and safety:
On the flip side ease of opening an account and starting business does not mean that business is safe and secure, the less paperwork the more your investments are risky, the most important thing about which there is excessive paperwork from the stock market brokers is because it is well regulated and under radar of multiple state institutions which keep an eye on them so the chances of fraud are minimum and investments are secure, stock market is regulated by PSX, SECP, CDC, NCCP and many other regulatory bodies which ensure safety and security of your investments. Forex too has some regulations SECP keeps an eye on them but as Forex business is carried out mostly through a joint venture by a local and foreign broker, so it is difficult to keep a tab on foreign brokers as they don't fall under state regulation and it aggravates the risk manifold. Moreover, local brokers are not always the registered ones and there has been frauds or fake brokers minting money from investors which ran away later. As for crypto it is highly risky there is no state regulations and regularity authority between you and between apps/exchanges which can protect you from any sort of irregularity or scams. You are on your own, this makes crypto easiest to start but the riskiest one.
3. Starting amount for investment:
Minimum amount to start stock business is 5000 rupees, for forex mostly amount in dollars is charged as a safety deposit/initial deposit limit as well as a foreign currency enabled bank account would be required. The limit can be anywhere between 25 to 100 dollars, as mentioned earlier there are relatively less regulations from SECP on forex brokers, so it is preferable to invest in the broker which charges relatively more money as initial deposit, it may indicate reliability. As for crypto there are no such limits.
4. What you are trading?
An important thing to know about a business is what really are you doing in that, stock market is equity market it means in whatsoever stock you will do business, corresponding to that a physical business or company will be working on ground, whose offices you can see and visit. So, stock market is a physical share in 500+ companies divided into 35 sectors working through out Pakistan, in short it is a partnership on micro level in off and running business on ground, so it is a business of a businesses.
Forex is trading in pairs of currency, Dollar-PKR, Pound to Dollar etc there are multiple pairs in which you trade one goes down and second goes up and you lose or gain money as result. It is practically making money from trading money. In strict terms it is not backed by anything but currency notes are backed by state bank’s guarantee. So, they have still a solid ground.
As for Crypto no body knows what practically it is, it has neither physical presence or tangible asset, like stocks, nor it has any state bank guarantee. So practically they are all in air, therefore if they crash and their virtual value drops to zero you will have nothing in tangible form to hold on in hope of regaining the worth, this factor makes them risky, while in currency even if value of rupee drops to zero against dollar, it will still be backed by SBP and has its worth inside Pakistan, similarly the stock shares will remain there as business and tangible assets of a business its physical setup will continue to exist even if share loses all its value it can regain that eventually sometime.
5. Market Capitalization:
In terms of total worth global stock market is 121 trillion USD, but as for many of Pakistanis except for expats global markets are off limit so worth of Pakistan stock market is right indicator for them which is 34 billion USD, global forex market is accessible for Pakistanis and its worth is whopping 2.4 quadrillion USD which makes it hundreds of times greater than the sum of all global stock markets, whereas Crypto market again accessible wholly from Pakistan is 884 billion dollars, greater than Pakistan stock market but many times smaller than US stock market.
To sum it up, crypto is the easiest, and stock market is the safest business to start with, forex lies in somewhat middle risker than stocks, safer than crypto. For minimum limit to start business all are easier to manage. Stocks are highly tangible, forex fairly tangible, while crypto is intangible. Stock business is virtually fraud free where forex has moderate and crypto has high risk of frauds.
As for my preference or opinion, I would like to learn the safest business first to build wealth, and then move into risker ventures like forex because the greater the risk the greater the reward, and also because you can only take risks when you have substantial wealth which you are willing to lose too in hopes of gaining higher returns, so I would recommend forex learning at later stage when you develop firm understanding and experience of stocks first, forex also offers huge potential for pro level and experienced people because of its staggering worth in quadrillions. For crypto I would suggest what is intangible and practically makes no sense I would refrain from entering into that market. Or will do investments of only 1 to 5 percent of my total wealth into established cryptocurrencies like Bit Coin but only on that stage in which it becomes practically ok with me if I lose all the wealth in an hour and have nothing to worry about. For crypto other than Bit Coin I would refrain from entering into them at any cost.
#PSX #FOREX #CRYPTO #OPINIONS #ANALYSIS
Malik Hassan Ali

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