Foreign Exchange vs Stocks: Which Is Better?
Many investors are now looking at forex vs stocks, wondering if it may be worth making a move or at least accelerating their range in order that they begin to trade both. Even successful investors should consider expanding and stock traders who are fighting may benefit significantly from making the switch. Here we compare forex vs stocks and consider some of the advantages of currency trading.
Two Way Market
When you are trading stocks, you are limited to purchasing a stock that you believe will rise and then selling it. Currency exchange is always an exchange: to buy one currency you must at the same time sell another. You cannot buy US dollars with US dollars. So you are always dealing in a currency pair, and this means that you can open a trade in either direction. As with stocks you can buy the pair (in fact, buy the base currency) if you think that the value of the base currency relative to the quote currency will rise, but you can also do it the other way around. That is, you can start by selling the pair (selling the base currency to buy the quote currency) if you believe that its price will fall.
Trading Hours
Trading opens on Monday morning in Australia (Sun. evening US time) and does not close until Fri. afternoon in the usa. So foreign exchange is a 24 hour market, 5 days each week. This can be advantageous for anybody who wants to trade outside of ordinary business hours in their own country. While speculative stock trading is tricky if you cannot access the web during the day, you can always trade in currency in the evening.
Smaller Account Balance And More Leverage
foreign exchange brokers will routinely allow leverage of 200:1 or perhaps more, so you can control a much larger position with a smaller account balance. This also gives forex brokers a chance to permit traders to start with a lower investment. While a regular foreign exchange account customarily carries a minimum investment of $10,000 or more like a stock broker account, it is feasible to open a mini currency exchange account with only a few hundred bucks. So traders can get started for an exceedingly low investment.
The foreign exchange market is getting so much airtime that it is worth investigating for all retail stock traders. Open up a demo foreign exchange trading account so you can test out your systems on the currency market without risk and look into foreign exchange vs stocks for yourself.
Tags: Finance, forex, forex trading, investing, money, stocks, traders