Why to Choose Trading Forex Over Trading Stocks
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Why to Choose Trading Forex Over Trading Stocks
By Larry Long
Forex Over Stocks?
Why would one choose to trade the forex market over the stock market? There are several good reasons all of which have to do with making more profit more easily.
Eliminate the middleman
When trading stocks there is always a middleman involved with the transaction, usually taking a considerable chunk of the profit for commission. By spot trading currencies you bypass the middleman. With the explosion of effective online forex brokers in the last few years traders are able to enter the forex market directly and trade currencies with a few clicks of their mouse leaving out the middleman and increasing their potential for profit.
Much greater leverage than trading stocks
Your maximum leverage is 2:1 when trading stocks. In the foreign exchange market brokers offer up to 400:1 leverage; 200 times what you can get trading stocks. An example: say you put $1,000 in stocks, at 2:1 leverage you could purchase shares valued up to $2,000. However, invest the same amount on the FX market at a margin of 400:1 leverage and you can work with up to $400,000 worth of currencies. The high leverage option is one of factors that is most appealing about forex market, allowing the common man an opportunity to invest along side the wealthy. NOTE: It should be noted that trading using leverage can improve your chances for gains as well as losses on any given trade. Trade smart!
Less to keep up with
Did you know that there are about 8,000 companies that are traded in the stock market? What a chore it would be to evaluate which ones to invest in and which ones to steer clear of; choosing which to trade would be tedious and confusing. The proverbial needle in the haystack comes to mind here. However, the forex market has only 6 major currency pairs to choose from, and around 34 second-tier currency pairs. How much less trying is it to keep up with the characteristics of 40 currency pairs than that of 8000 companies?
Trade forex 24-hours a day
Each week the FX market opens Sunday at 5P.M. EST, when the Sidney and Singapore markets open and continues until Friday at 5P.M. EST when the New York market closes. During that time the market is open for trading 24 hours a day. When trading currencies you get to decide when to trade, when it is best for you. To trade stocks while the U.S. markets are closed is difficult and the liquidity is limited. With forex, trading goes on 24 hours a day, starting on Sunday at 5P.M. EST and ending Friday at 5P.M EST.
Measuring the currency market is less complicated
When researching stocks one must look at balance sheets, past performance, the viability of the company in the future, market for the product the company offers, on and on, ad infinitum…
In comparison there are two main factors that affect supply and demand in relation to currencies; interest rates and the overall economic state of the country the currency originates from. Basic indicators like, the trade balance, foreign investment, PPI, CPI and GDP all reveal the general state of an economy, and cause fluctuations in the supply and demand for a given currency. Since information on interest rates and currencies, various expert commentaries and data on international trade are readily available it is not difficult to get an informed picture of the market with which to make wise trades.
Profit from economic instability
Markets change. Sometimes they change fast. The foreign exchange market allows you to profit daily from the fluctuations in the economic climate of any country. Even during these turbulent times for the American economy FX traders are raking in the cash by making smart trades, something anyone with average intelligence can learn to do. The stock market, however, always suffers during times of economic uncertainty causing many to lose money.
As you can see there are several good reasons to choose the foreign exchange market over the stock market. However FX is not without its pit falls and should be entered into cautiously. Which is why ForexSystemsReport.com was created, to offer objective reports on products related to foreign exchange trading. At ForexSytemsReport.com you will find reports about forex training courses, forex brokers and which ones should be avoided, different software used for trading and explanations of many forex trading concepts.
Larry Long is a foreign exchange trader that is committed to accurate information being published about the forex market and products. He owns and operates ForexSystemsReport, a website dedicated to unbiased, objective reports on products related to the forex market. You can find this site at http://www.forexsystemsreport.com
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