Top Benefits Of Trading Forex vs. Stocks

Article Written By: Raz

Costs associated with the stock market include (but are not limited to) dealing fees, performance fees, annual management fees, etc. On the other hand, the Forex market involves some of the lowest costs associated with financial services. Transaction costs are reduced to the bid/ask spread and sometimes a withdrawal fee.

Stock traders are able to perform transactions over a short time frame. On the other hand the Forex market operates non-stop Sunday (5 p.m. EST) through Friday (5 p.m. EST) while customer support for various Forex brokerages is often available 24/7. In terms of convenience the Forex market reigns supreme.

The maximum leverage allowed for stock trading is 2:1. In other words, a $100 investment in stocks may buy up to $200 worth of shares. With Forex, leverage can go as high as 200:1. On the Forex market a leverage ratio of 200:1 applied to $100 means that the trader controls $20.000 in funds. It is important to note that leverage can work both ways i.e. to the benefit of the trader, or against him. While some traders prefer to constantly deal in moderation, others prefer to risk more, but at least the Forex market offers either option.

Each market product sells for a certain amount. The goal of most (if not all) businesses is to convert a final product into cash or other liquidities. Stocks convert into cash over a certain period of time, depending on the nature of the stock. On the other hand the Forex market requires no conversion considering that the trader is already dealing in cash.

The forex market is the largest, most liquid and dynamic market in the world, with a daily turnover hovering around $4 trillion per day. As such, it is largely protected from fluctuations resulting from decisions of single individuals or governments. The stock market stands at the opposite end: positive or negative appraisals of a single company s stock often result in dramatic movements on the entire market.

Trading stocks is not a direct operation between the trader and the buyer or seller of the security or instrument traded. Instead, it requires a middleman that intermediates the transaction. The associated costs involves fees and waiting times or, as many businessmen prefer to say, time and money”. On the other hand, currency trading is decentralized, which means that traders are able to interact directly with the currency market, and can buy and sell currency with the click of a mouse.

There are seven major currency pairs associated with Forex trading, as opposed to the stock market which trades thousands of stocks. No stock trader is able to follow all of the stocks on the market, which means that often potential profit is lost.

About the Author

Find the Best UK forex brokers

You Can Link Directly to "Top Benefits Of Trading Forex vs. Stocks" by using the url:
http://www.allbestarticles.com//finance/forex/top-benefits-of-trading-forex-vs.-stocks.html

This Article Has Been Published on Mon, 6 Jun 2011 and Read 441 Times

Find All Best Articles at http://www.allbestarticles.com

Rating: Not yet rated

Comments

No comments posted. Comments are closed.

Related information on Forex

Forex Trading: When it is not advisable to trade
Forex Trading: 4 Stop Loss Techniques
Forex Trading: Forex Indicators for Beginners
Forex Trading: Creating a strategy
Online Trading: How to do trading with minimum risk
Forex Trading: Spread, Trend and Leverage
Forex Indicators Tell the Trader Whether To Buy or Sell
Make Money with Forex: How to Start
Long-term Trading Vs. Short-term Trading
Forex Trading Education Can Help Traders in Achieving Success
Difference Between Spot Forex Trading and Currency Futures
An Overview About Forex Trading
Top Benefits Of Trading Forex vs. Stocks
Forex Trading Course
Forex Trading: How To Start for Beginners
Forex Technical Analysis - Running the Numbers
Forex Indicators
Advanced Forex Trading Courses
Online Currency Buying and selling: Understand It And Win
The Basics of Financial Spread Betting
Easy Forex Signals Daily Fx Update
Benefits of CFD Trading
Day trading forex with triangle patterns
Getting the Best Advanced Currency Trader Training
Why Some CFD Day Traders Make Money and Others Dont