There are several advantages of trading in the Forex market that is superior to the stock market. They are listed below.
1. 24 hrs a day – The Forex market is open 24 hours a day. Due to this, there is always a suitable time for anyone around the world to trade. Unlike the stock market which operates only during working hours, Forex allows office workers the opportunity to trade after returning home from work.
2. No commission – Forex brokers do not take a commission when you buy or sell a currency. Instead they take a standard fee known as the “spread”. This is the difference between the Bid and Ask price. This will fluctuate depending on the currency pair you are trading and broker you are trading with.
3. High liquidity – The daily volume of the Forex market exceed a trillion dollars. That is more than the volume of the NYSE, NASDAQ and the London equity market combined! You will never have to worry about liquidity and finding a buyer or seller.
4. Healthy daily range – The daily range of the major currency pairs are usually close to or exceed 100 pips. This means that as a trader you have plenty of opportunities to take trades and profit from the Forex market.
5. No fixed trade sizes – It is possible to trade large volumes in the Forex market as well as tiny amounts. There’s very little restriction. This gives you flexibility as a trader in deciding how much you want to put into each trade.
6. No restriction on short selling – For some countries, short selling in their stock markets is prohibited. However, in the Forex market, there is no restriction on short selling as long as your margin is able to support it.
7. Not necessary for fundamental analysis – There is not really a need to go into fundamental analysis for the Forex market, unlike for the stock market, where it is important to learn as much about a company as possible before you buy its stocks. It is possible to concentrate on purely being a technical trader if you want to.
8. Trade from anywhere – Most Forex brokers offer an online trading platform which provide charting and news reporting features. A computer with internet connection plus an active Forex account are all you need to start trading. As a Forex trader, you can be anywhere around the world and still trade with instantaneous execution.
9. No manipulation – Unlike the stock market where shady operations and adverse news can cripple a company overnight, no one single entity can control the direction of the Forex market. Also, there is no such thing as insider trading in Forex trading.
10. Low margin / High leverage – When you trade Forex, small capital with great leverage is provided. Most Forex brokers need you to put up only a 2% margin deposit, meaning you get 50 times leverage. Many brokers will even provide up to 100 times leverage. This means that you can control larger sums of money with very little actual cash outlay.
