Forex Trading better than Stocks?

Forex Trading better than Stocks?

by Michael Summers

The Stock Market is the best known place to invest your money, but is it the best? The Forex market has become much more popular lately, and possibly for very good reason. In this article I will quickly cover a few reasons why the Forex might be advantageous over the stock market.

The first and biggest difference is leverage. Stocks are often not leveraged at all, and if they are it is usually 2 to 1 or less, but in the Forex markets 1000 to 1 leverage is not uncommon. That means with just $1000 you can control a $100,000 position. Now I must warn you that this works both ways and your trading must take into account this increased risk, but the potential for profit is massive.

Another difference is the sheer number of choices. Some might like having thousands upon thousands of stocks to choose from, but for others it can be ovewhelming. When trading the Forex, there are only a handful of major markets to choose from, meaning you can make your decisions based on the whole market, not just a sliver.

Another advantage may be decreased cost. Transaction fees can really add up, but with Forex trading, you average commisssion is about $15 dollars, as opposed to stocks where you can pay up to $100 for the same service.

Lastly let's address liquidity, lack of which can cause alot of problems. The Forex market is traded 24 hours a day and has a daily trading volume 50 times that of the New York Stock Exchange. No comparison.

So as you can see the Forex offers an unique alternative to the stock market, but it's not for eveyone. Just as different trading systems are best for different people, different markets are best for different personalities, and you should make your decisions accordingly.