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Advantages Forex Trading Has Over Other Investments |
The following information gives you a comparison of different investment opportunities in comparison to Forex trading such as the Equities market and the Futures market.Forex Market VS Equity Markets and the Futures markets
1. Difference in daily trade turnover
The daily trade turnover of a Forex market is much more than the Equities or the Futures market. The Forex market: has a daily trade of almost two trillion dollars whereas the Equity Market has a daily trade turnover of around only 200 billion daily. The Futures market has a daily trading turnover of: 400 billion daily.
2. Difference in Trading Hours
The trading hours of a Forex market are more than those of the Equities market. The Forex market’s trading hours are all day round that is it is a 24 hour market, 5 days a week On the other hand, the Equity Market lasts from Monday through Friday with selective hours time span approximately 7 hours a day.
3. Difference in Transaction costs
The Forex market is almost zero or no commission market while the equities market charges high commission and trade charges. The Futures market also has high commission charges on its transactions.
4. Difference in Specialization
The Forex market differs in areas of specialization from the Equities market. In the Forex market: most of the trade is done on major currencies like USD, EUR, JPY, GBP, CHF, CAD and AUD. On the other hand, the Equities market has upto 40,000 stocks to select from.
5. Difference in buying power
The Forex market also differs from the Equities market with reference to its buying power and leverages. In the Forex market leverage is up to 400:1, while in the Equities market, leverage ranges from 2:1 to 4:1.
6. Difference in Trading
Trading with Forex is the simplest form of trading since it just requires a computer system and an internet connection. On the other hand, the Equities and Futures market require you to go to the Stock Exchange to monitor your trading activities.
7. Difference in profits in both rising and falling markets
In the Stock market, an investor can only profit if the stock price goes up. When the stock price fall, the investor can either keep the stock hoping that the price will bounce back again in a later date or sell it off at loss. However in forex trading, traders can profit from both rising and falling markets. This is because you are selling one currency and buying another currency simultaneously, so you are actually selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other so there is an equal opportunity for profit whether a market is rising or falling.
8. Differences in Earning Potential
Everyday nearly $ 2 trillion in different currencies are traded in the forex market. This has made the Forex market the biggest and most liquid financial market in the world. It is very hard to manipulate the market and earning potential is unlimited. Forex is the most stable financial businesses as compared to the Stock market.
9. Difference in Transparency
The Forex markets are highly transparent as compared to the Equities and Futures markets. Anyone can search for forex information online with a click. The Forex investor can do his own analysis too. This feature is not present in any other market.