8 advantages of Forex trading

This article highlights the top eight reasons why you might prefer to trade in Forex rather than on the stock exchange. This is particularly aimed at people who are new to trading and are wondering which would be the best sort of trading for them to take part in.

advantages of Forex trading

  1. There is a far greater trading volume in Forex. It handles $3.2 trillion transactions a day compared to $55 billion transactions on the New York Stock Exchange. This means there are lots of buyers and sellers for all types of currency.  This means that whenever and whatever you want to buy and sell there will always be someone willing to buy or sell with you. This also keeps the prices down.
  2. You can trade for twenty four hours a day for five days a week. This means that you can choose when you trade and how. This means that you can trade before or after work and not have to interrupt your usual daily routine in order to be a Forex trader.  So you can do your profession in the day and make money Forex trading at night. It also means that there isn’t a rush to make trades just before the market closes, and potentially make mistakes in what you are trading because you are under pressure of time.
  3. You may not have to pay commission when you trade in Forex like you do on the stock exchange. There are also no transaction fees in Forex.  The fees involved are in the slippage cost.  This is incurred when the market is entered at a worse price than what was wanted. This isn’t usually a problem for low volume trades, but if you are trading at a high volume it can be significant.
  4. You can just pick on a few currencies to concentrate on rather than having to pick from 5000 stocks. This can make it easier to see patterns and make your trading much more successful.
  5. You don’t need a great deal of capital to start out. You can set up your first account for just a few hundred dollars.  This is a lot less than you might need to use to start up on the stock exchange.  This means you have a far lesser risk of losing a lot of money. Obviously you can spend a lot more money but you can start off with small amounts until you get used to the trends and are in a position to gamble larger amounts with confidence.
  6. You can trade on leverage, and you can potentially magnify your gains this way but also you will magnify your losses. You can trade on the equivalent of ten thousand dollars but only use up to two hundred dollars to do this.  That way you can make a big profit from a small starting amount.
  7. If you trade in Forex there is no possibility of anyone having insider knowledge and being able to take advantage of this in the same way as they can in the stock market.  In Forex any news is made available to everyone at the same time so no one is at an advantage. This makes it a more fair trade and you can make money more easily even with very little knowledge of the market.
  8. Forex can be more predictable that the stock exchange. Forex tends to follow trends so it is easier to work out where you might make the most money.  You just need to spend some time studying these trends and then anyone can make a lot of money being a Forex trader.  On the stock exchange there aren’t trends in the market and things are therefore a lot less predictable so you can lose money far more easily.

So you can see that if you want to trade the easy way then Forex is the way to go.  Just make sure you start out slowly and be sure that you are confident in what you are doing before you make any big investments.  You are less likely to lose large amounts of money, and with just a little bit of skill and experience you can soon be making profits.