Why Trade FOREX?

No comment 53 views

My purpose for writing this article is to show you the benefits of trading on the FOREX market. However, there is one myth that I want to get rid of before going further. The myth is that there is a difference between trade and investment. To dispel that myth, I quote from Al Thomas, President of the Williamsburg Investment Company, who wrote: “If It Doesn’t Go Up, Don’t Buy”. He said, “Everyone who invests is a trader, only the time period is different.” This is a lesson I took seriously after beating on the stock market in 2000.

So now, let’s compare the features of currency trading with features of trading stocks and commodities.

Liquidity

The FOREX market is the most liquid financial market in the world around 1.9 trillion dollars traded every day. The commodity market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars a day. This ensures better trading execution and prevents market manipulation. This also ensures that trades are easily executed.

Trading time

The FOREX market is open 24 hours a day (except weekends) which means that in the US it opens at 3:00 pm Sunday (EST) and closes on Friday at 5:00 (EST), which allows active traders to choose the times they want to trade. Commodity trading hours are everywhere depending on what commodity you are trading. Including extended trading hours, US stocks can be traded from 8:30 a.m. to 6:30 p.m. (ET) on weekdays.

Leverage

Depending on the size of your FOREX account, your leverage maybe 100: 1, although there are FOREX brokers who offer leverage of up to 400: 1 (not that I would recommend such leverage). Leverage on the stock market can be as high as 4: 1, and on the commodity market, leverage is different from commodities traded but can also be quite high. Because the commodity market is not as fair as the FOREX market, leverage is basically risky. Even though I never left commodity trading at the end of the day, that fear was always in my mind.

Trade fees

Transaction fees in the FOREX market are the difference between the buying and selling prices of each currency pair. There is no brokerage fee. For the stock market and commodity market, there are transaction fees and brokerage fees. Even when you use a discount broker, the costs increase.

Minimum Investment

You can open a FOREX trading account for only $ 300.00. It took me $ 5,000 to open my futures trading account.

forex market

Focus

85% of all trade transactions are carried out on 7 major currencies. In the US stock market alone there are 40,000 shares. There are more than 200 commodity markets, although some are so illiquid that they are not traded except by hedges. As you can see, the smaller number of instruments allows us to study each of them more closely.

Trade execution

In the FOREX market, trade execution is almost instantaneous. In both the equity and commodity markets, you rely on brokers to execute your trade and the results are sometimes inconsistent.

While all of these features make trading the FOREX market very attractive, it still requires a lot of education, discipline, commitment, and patience. All trades can be risky.

Related Search

author
Forex4Live.com is a forex trading system website that started to be published since 2011 and has been used by thousands of traders around the world. The system is very simple and accurate, priced at $ 167 for a lifetime membership with no monthly fees or hidden fees. Our team created this system by testing thousands of indicators then selecting 23 indicators and combining them into one great trading system.
No Response

Leave a reply "Why Trade FOREX?"