Top Five Reasons For Choosing Forex
Foreign exchange and stock comparisons all over the net are going to show the advantages of choosing to trade in forex. Of course if you’re searching for long term investment then that’s another thing, but for speculative traders the foreign exchange has many special features that make it particularly tasty. Here are the top five reasons for selecting forex trading over stock trading.
1. 24 Hour Market
One practical advantage of the foreign exchange market is that it is open for trading 24 hours per day Monday thru friday. This is because of the worldwide nature of the market and the proven fact that it is always business hours somewhere in the world, excluding weekends and holidays. So a forex trader can work a day job and trade in the evenings or early mornings.
2. Liquidity
Currency is liquid unarguably, if liquidity measures the ease of converting an asset into cash. More frequently it is taken as the quantity of money in a market. On this, too, currency scores really high.
Turnover in the currency market was almost $4 trillion each day about according to a survey by the Bank For world Settlements in December of 2007. It has potentially exceeded that now.
This is considerably more than is traded on all the stock markets in the world added together. In foreign exchange you are not restricted to trading in your own country or on your own nation’s currency, so the benefit to this trader of being part of this great market is clear. You have a much better chance of getting the price that you see or the price that you would like.
3. Openness
Another advantage deriving from the sheer amount of money in this market and its high trading volume, is the openness of the market. There is very tiny opportunity for insider dealing in a market which deals with the economic performance of entire states and involves every major finance establishment in the world. This implies that the retail trader is not off balance to the extent that may be true in the market and lends more weight to our forex stock debate.
4. Leverage
Leverage is the trader’s most necessary tool in that it allows a tiny fund to manipulate a giant position size, resulting in a massive proportional investment return, assuming that you are lucrative. The leverage offered by forex brokers tends to be higher than in stock trading.
In forex, a hundred times leverage is seen as standard or low, two hundred times is common and 400 is possible in some circumstances. Of course this makes foreign exchange trading intensely risky except for a successful trader it is a significant advantage as it implies more money can be made from less.
5. Trade Both Directions
When you trade forex, you are always dealing with a currency pair, exchanging one currency for another. This suggests that you can trade in both directions. As an example if you are trading EUR/USD, you can start by investing in either EU Bucks or US dollars depending on which one you suspect will rise. So you can buy or sell the pair ( go long or go short ).
In a way this is like trading stock options or futures, but with more pliability. The flexibility comes from the fact that currency values are relative to each other. They can never all fall at the same time, as stocks can. So this is another point for forex in the foreign exchange stock comparison.
Related posts:
- Suuccess Secret of Forex Market
- When to do Forex Trading
- How To Start Trading The Forex Market? ( Part 2)
- Finding a Good Forex Framework
- Choosing The Right Forex Trading Tutorial For You
Tags: currency trading, finance, foreign exchange, forex, forex trading, investing, money, stock trading, stocks, traders, trading
