Tuesday, 3 May 2011

Why Choose Forex Trading Over Stocks?

Did you know that the Foreign Exchange Market (FOREX) is the largest financial market in the entire world? With total DAILY transactions of about $1.4 trillion + /day (over fourteen times all American stock markets combined!) there has GOT to be some advantages to the FOREX market, right? Indeed. There are many advantages that FOREX has over the stock market which we will discuss here.
First, the FOREX is open 24 hours a day 5 days a week. It opens in Sydney Australia and closes finally on Friday afternoon in New York.
A major plus in regards to FOREX is the fact that there are no broker commissions involved when trading in FOREX. Also, the trades are shorter term trades where items are bought and sold within minutes and not normally held like corporate stocks.
Another advantage to FOREX is the liquidity of the market due to the volume of trading that occurs worldwide.
In addition to liquidity, it does not require a lot of money to actually take part in FOREX trading as it take less than $300 dollars to get started with FOREX trading as opposed to stocks.
In all actuality, FOREX is much more like a day trading type of activity versus that of the investment value of the stock market.
Even though this may SEEM a bit more risky, it is also important to realize that the FOREX does not move as abruptly as the stock exchange as the average daily movement in FOREX trading is around 1% change versus that of ten times the amount or more!
Remember, also that the FOREX trading market reflects actual economies and fundamentals as opposed to how a certain business is performing inside a certain economy inside a certain marketplace.
So research on future FOREX trades have a lot to do with what is going on around the different parts of the world and many fundamental items such as that of the economic status of a country usually do not change as drastically as quarterly earnings reports may shift a stock’s momentum instantly.
When leverages are concerned, many FOREX picks can be leveraged 100:1 ($500 = $50,000 in the market) whereas a stock may possibly get 2:1 or less.
Overall, it seems that both the stick market and FOREX trading are two very different types of trading and it mostly depends on the individual investor and how they prefer to do business when considering what type of trading would be best for you.


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