May 2022

7 compelling reasons why you need to trade stocks

7 compelling reasons why you need to trade stocks

As a trader, there are many compelling reasons why you need to trade stocks. Whether you’re looking to grow your portfolio or generate income, trading stocks can help you achieve your financial goals. Here are seven reasons why trading stocks is a smart move for traders.

Stocks can offer protection against inflation

Over time, the purchasing power of money declines due to inflation. It can erode the value of savings and fixed income investments, such as bonds. Stocks can offer some protection against inflation. When prices rise, companies typically raise their prices, which leads to higher profits and share prices.


In addition, many companies pay dividends, which provide a source of income that tends to increase with inflation. As a result, stocks can help preserve your investment portfolio’s purchasing power over the long term. For this reason, stocks are often considered a good hedge against inflation.

Stocks provide diversification

A critical aspect of investing is diversification, which means spreading your money across different asset classes to mitigate risk. While there are many ways to achieve diversification, one of the most common is to invest in stocks. When you purchase stocks, you become a partial owner of a company and are entitled to a portion of its profits.


There are thousands of stocks on the market, and investors who trade stocks can spread their money across different companies and fields. As stocks tend to be more volatile than other asset classes, they have a greater potential for providing higher returns over the long term compared to other assets. Combined with having a diversified portfolio, investors can minimize risk and maximise profit potential.

Stocks offer the potential for high capital gains

Another reason to invest in stocks is that they offer the potential for high capital gains. As mentioned, stocks can be quite volatile, with great market movements over the long term. When the price of a stock goes up, you can sell it for profit, and the capital gains you receive are taxed at a lower rate than other forms of income, such as interest.


Long-term capital gains are taxed even lower than short-term capital gains. As such, stocks can be a great way to generate tax-efficient profits all throughout your life.

Stocks can provide income through dividends

In addition to capital gains, stocks can also provide income through dividends. Dividends are payments made by companies to their shareholders out of their profits. They can be paid in cash or shares of stock.


Dividends provide a source of income that can help offset any losses incurred from selling stocks at a lower price than you paid for them. In addition, many investors reinvest their dividends, leading to even higher returns over time.

Stocks are liquid

Stocks are liquid, which means they are available in abundant volumes on the market. They can be quickly bought and sold, making them ideal for investors. High liquidity is favorable in trading as it allows traders to access their money quickly in an emergency. For example, if you invest in a stock and the price decreases, you can sell it immediately and use the proceeds to purchase another investment. This flexibility can help manage your overall investment portfolio.

Stocks are tangible assets

Houses and automobiles are the most common assets that come to mind. However, intangible assets, such as stocks and bonds can be just as valuable. A stock is a share in the ownership of a company, and it represents a claim on the company’s assets and profits. Unlike tangible assets, stocks can also be bought and sold fairly quickly and easily.


As a result, stocks are an essential part of many people’s portfolios. Although the value of stocks can go up and down in the short term, over the long term, they have consistently outperformed other asset classes, such as bonds and gold. Many financial advisers recommend that people invest a portion of their portfolios in stocks.

You don’t have to be a maestro to trade equities effectively

Although you may not need to be an expert to trade stocks successfully, knowing what you’re doing. Many resources help you learn about the stock market, including books, websites, and online courses. You can start trading stocks like a pro with some research and practice.

Can you trade cryptocurrencies in forex?

Can you trade cryptocurrencies in forex?

The short answer to this is: yes, you can trade cryptocurrencies in forex.

Several forex brokers offer cryptocurrency trading pairs, including Bitcoin, Ethereum, Litecoin, and more. You can trade these currencies against each other or traditional fiat currencies like the US dollar. Cryptocurrency trading is generally done on margin, meaning you can trade with leverage.

The forex market is the world’s largest and most liquid marketplace. Bitcoin and other cryptocurrencies have given currency trading an exciting new dimension. Many forex brokers have started to accept bitcoins for currency trading.

Forex trading using Bitcoin

Consider a bitcoin-based forex trade, for example. First, you create a forex trading account with a broker that accepts bitcoins. You then send two bitcoins to the broker’s digital wallet from your digital wallet.

Assume you want to trade $15,000 worth of bitcoins for £7,500 in British pounds at a bitcoin to pound rate of 1 bitcoin = $7,500. Your deposit of 2 bitcoins is worth $15,000. If the exchange rate is GBP0.5 = $1, you will get £7,500 when your position matures.

The GBP/USD rate subsequently drops to 0.45 before resuming its upward trend, and you square off your position to receive $1,666.65 in your trading account after some time has passed. You’ve made a tidy profit of 11.11% and are ready to cash out.

Benefits of forex trading using Bitcoin

Decentralised valuation: One of the most significant benefits of trading bitcoin is that the market isn’t connected to a central bank, nor is it owned or controlled by a single entity. Digital currencies are independent of central geopolitical control and macroeconomic issues like country-specific inflation or interest rates.

The cost of trading is low: To attract new clients, most forex brokers that accept bitcoin keep trading fees very low.

No limitations: There are no worldwide limitations with bitcoin transactions. A trader based in South Africa may trade forex through a UK-based broker. Regulatory issues may still exist, but there are no national boundaries if traders and brokers are prepared to exchange.

Low deposit amount: The minimum deposit amount is usually set at $25, although some bitcoin forex trading firms allow traders to begin with less than that. Some forex trading firms have offered bonuses, including a matching deposit amount. Traders should be sure that the broker is authorised and well-regulated.

Security: You don’t have to reveal your bank account or credit card information when using bitcoin. This is a significant benefit in terms of cost and financial security.

Risks of forex trading using Bitcoin

Varying exchange rates: Bitcoin has a complicated and volatile history, which means its price varies frequently.

Different bitcoin exchange rates: There are numerous bitcoin exchanges, each with its exchange rate. Traders must know which bitcoin exchange rates the forex broker will be utilising.

The importance of a verified trader’s status: Using leverage is dangerous for inexperienced traders who may not know the risk. This risk isn’t just limited to cryptocurrency forex trading, and it also applies to traditional forex trades.

US dollar to bitcoin rate risk: Almost every broker sells the bitcoins received from customers as soon as possible and keeps the money in dollars. Even if a trader does not take a forex trade position right away after receiving bitcoin deposits, they are still exposed to the bitcoin-to-dollar rate risk between deposit and withdrawal.

Bitcoin security risks: Even if you keep your bitcoin in a digital wallet, they are still vulnerable to hacking and theft. Look for a broker that offers insurance protection against theft to minimise this danger.

The final word

Although it is possible to trade cryptocurrencies like bitcoin with forex, there are still numerous hazards. Trading in a decentralised currency with no costs of globalisation is an advantage in forex trading. However, the trade-off is simply adding a third currency to a trading pair that was previously unregulated. Only use a locally regulated forex brokerage if you want to take on that danger.