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Forex and stock comparisons all over the Internet are going to show the advantages of choosing to trade in forex. Of course if you are hunting for long-term investment then that's another matter, but for hopeful traders the forex has many special features that make it particularly fascinating. Here are the top 5 reasons for selecting foreign exchange trading over stock trading.  

1. 24 Hour Market

One practical advantage of the foreign exchange market is that it is open for trading twenty-four hours per day Monday through Fri.. This is as of the global nature of the market and the undeniable fact that it is always business hours somewhere in the world, excluding weekends and holidays. So a forex trader can work a day job and trade in the evenings or early mornings.

2. Liquidity

Currency is liquid unarguably, if liquidity measures the ease of converting an asset into money. More frequently it is taken as the amount of money in a market. On this, too, currency scores really high.

Turnover in the currency market was almost $4 trillion every day about according to a survey by the Bank For world Settlements in December of 2007. It has potentially surpassed that now.

This is considerably more than is traded on all the stock markets in the world added together. In currency exchange you are not restricted to trading in your own country or on your own country's currency, so the benefit to this trader of being part of this large market is clear. You have got a much better chance of getting the price that you see or the price that you need.

3. Openness

another advantage originating from the sheer amount of cash in this market and its high trading volume, is the openness of the market. There is very small opportunity for insider trading in a market which deals with the commercial performance of whole countries and involves every major finance institution in the world. This means that the retail trader isn't at a disadvantage to the extent that might be accurate in the market and lends more weight to our forex stock discussion.

4. Leverage

Leverage is the trader's most essential tool in that it permits a tiny fund to manipulate a large position size, leading to an enormous proportionate return on investment, assuming that you are profitable. The leverage offered by currency exchange brokers tends to be higher than in stock trading.

In forex, one hundred times leverage is seen as standard or low, 2 hundred times is common and 400 is possible in some circumstances. Naturally this makes forex trading extremely risky except for a successful trader it is a major advantage as it means that more money can be made of less.

5. Trade Both Directions

When you trade foreign exchange, you're always dealing with a currency pair, exchanging one currency for another. This means that you can trade in both directions. For example if you are trading EUR/USD, you can start by investing in either euros or US dollars depending on which one you think will rise. So you can sell or buy the pair ( go long or go short ).

In a way this is like trading stock options or futures, but with more suppleness. The flexibleness comes from the fact that currency values are relative to each other. They can never all fall at the same time, as stocks can. So this is another point for forex in the currency exchange stock comparison.

Tags: currency trading, Finance, foreign exchange, forex, forex trading, investing, money, stock trading, stocks, traders, trading