Advantages Of Trading The Forex
Over Stocks And Commodities

1) Advantages of trading the forex over stocks and commodities: The Forex is the largest financial market in the world. With a daily trading volume of over $1.5 trillion, the spot Forex market can absorb trading sizes that dwarf the capacity of any other market. In fact, when compared with the $50 billion daily market for equities or the $30 billion futures market, it becomes quickly apparent this gives you an almost infinite trading liquidity and flexibility.

2) Advantages of trading the forex over stocks and commodities: The Forex Market never sleeps. Trading positions can be entered and exited at any moment from any where around the globe, around the clock, six days a week.

There is no waiting for an opening bell as in the case of trading stocks. It is a 24-hours, continuous electronic (ONLINE) currency exchange that never closes. For anyone wanting to trade on a part-time basis, this is ideal, because you can choose when to trade, morning, noon or night.

3) Advantages of trading the forex over stocks and commodities: There is never a Bear Market in Forex, that’s because you have access to seamless pair of currencies. Meaning, because currencies trade in "pairs" (for example, US dollar vs. British pound GBP (GBP/USD) one side of every currency pair is constantly moving in relation to the other.

Thus, when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other.

Of course, it is up to you to choose the correct currency to be long or short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means you have equal potential to profit in both a rising or falling market.

4) Advantages of trading the forex over stocks and commodities: High Leverage, you are aloud to trade foreign currencies on a highly leveraged basis. Some brokers allow you to trade up to 400 times your investment.

This is primarily attributed to the higher levels of liquidity within the currency markets. Standard 100,000-unit currency lots can be traded with as little as 1% margin, or $1,000.

Mini Forex accounts are permitted to trade with just 0.5% margin, in other words, just $50 allows you to control a 10,000-unit currency position.

A Futures trader margin requirements generally equal 5%-8% of the contract value, will immediately recognize that the FOREX market provides much greater leverage, and for traders, who must post at least 50% margin, there is no comparison. If you are looking for an efficient use of trading capital, there is nothing that comes close to this.

5) Advantages of trading the forex over stocks and commodities: Price movements are more predictable. Although currency prices in the FX market may be volatile, they generally repeat themselves in relatively predictable cycles, creating trends.

The strong trends that foreign currencies develop are a significant advantage for traders who use technical analysis and strategies taught by varoius online courses and books.

Unlike stocks, currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. Over 80% of the volume is speculative in nature and, as a result, the market frequently overshoots and then corrects itself.

As a technically-trained trader, you can easily identify new trends and breakouts, which provide for multiple opportunities to enter and exit positions.

6) Advantages of trading the forex over stocks and commodities: Commission-free Trading and Low Transaction Cost. When you trade Forex, through one of our recommended brokers review section, you'll do it totally commission-free!

These brokers don't charge commissions to trade or to maintain an account, and that goes for all clients trading the FOREX through them, regardless of your account balance or trading volume. Even Mini Forex traders can buy and sell currencies, commission-free.

There are none of the usual fees to which futures and equity traders are accustomed - no exchange or clearing fees, no NFA or SEC fees. Because currencies trade over-the-counter (OTC), via a global electronic network in Forex, what you see is what you get, allowing you to make quick decisions on your trades without having to worry or account for fees that may affect your profit/loss or slippage.

So, how does a Forex broker make money, because you know there is nothing for FREE! Like all traded financial products, over-the-counter currency trading involves a bid/ask spread, which represents the prices at which your counterparty is willing to trade. The broker gets a piece from the difference between the bid/ask.

Because the currency market offers round-the-clock liquidity, you receive tight competitive spreads both intra-day and night. Stock traders can be more vulnerable to liquidity risk and typically receive wider trading spreads, especially during after-hours trading.

7) Advantages of trading the forex over stocks and commodities: Instantaneous Order Execution and Market Transparency is highly desired in any trading environment. The greater the market transparency, the more efficient the market becomes.

Unlike other markets where transparency is compromised, like in the Enron scandal, the Forex markets are highly transparent, so finding information and analyzing countries, and having access to real-time research and news, is easier than companies.

Because of this transparency, as an FX trader, you will be able to exercise risk management strategies in accordance to the proper fundamental and technical indicators.

The Forex market offers the highest level of market transparency out of all the financial markets. Because of this, order execution and fill confirmation usually occur in just fractions of seconds. Markets that do not offer executable prices and force traders to absorb slippage obviously compromise the trader's profit potential considerably.

So there you have it, the Advantages of trading the forex over stocks and commodities.

All order execution is all-electronic in the forex markets and because you'll be trading via an Internet-based platform, instantaneous execution is routine. There are no exchanges, no traditional floor brokers, and consequently very little if any delays.

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