There is a major difference between trading of forex and stocks. Knowing and understanding these differences will assist traders to know the right market for themselves.
There are numerous benefits of forex trading over stocks trading therefore forex trading market is ideal for beginner and small scale investors. Listed below are the 6 reasons how forex trading is better than stocks trading:
24 Hour Market:
Forex market is open all day long and you trade anytime of the day. For small individual investors just beginning could greatly take advantage of this as they can trade in their free time. Forex traders can adjust their schedule around the different trading options and schedule their forex trading accordingly.
Some people are free at night only so they can do forex trading at night and depending on the region your reside in, the banks opposite the globe are open for you to continue trading.
High Liquidity & Fast Transactions:
Forex trading is trading of currencies and trading in forex means you carry out trade in cash. Cash has the most liquidity and due to involvement of cash, trades can be executed instantly. Your time is not wasted in forex trading.
Low Cost of Transactions:
The brokers of forex trade are not paid the traditional commission fees and there are no hidden fees either. The fee that is paid to brokers is calculated directly from the trade in the form of bid as spread. And spread is the difference of how much you sell a currency for and how much you actually paid for it. The spread is commonly known as pips or points.
Margin and Leverage:
Another major advantage the forex traders have the skill to trade on margin. This margin allows them massive leverage in trading. It also offers them with the opportunity to make extraordinary profits with rather small investments.
For instance, a forex broker allowing a margin of 100:1 you could purchase $100, 000 in currency with a small amount of $1000 deposit. Traders need to be careful as a careless attitude regarding leverage could lead to losses.
Not Influenced Easily:
The forex market happens to be the largest in the world. Due to its enormity, no fund, bank, individual or government body could influence it for a long time. Forex trading business is entirely the opposite of the stocks trading where a mere negative appraisal on the television regarding a company’s stock could lead to disastrous results.
Absence of Bear Markets:
There are no bear markets in forex trading and you will be able to make money no matter the prices whether up or down. But this holds true only if your predictions are true.
Due to the advantages mentioned above, forex trading clearly surpasses the stocks trading in many ways. It happens to be the best option for the individuals and beginning small investors. Still thinking over which trade to enter and eventually master, forex trading is a good choice for you.