In this article we analyze what are the main advantages of trading in the currency market compared to doing it in the stock market. Here they are:
The Forex market is open 24 hours. Many of the brokers are open Sunday at 2pm EST through Friday at 4pm EST, with customer service available 24/7. With the ability to trade during US, Asian, and European market hours, you can make your own hours of operation.
Many brokers do not charge commission or additional transactions for online or telephone operations. Combined with the tight, consistent and transparent spread, forex trading costs are lower than most other markets. Brokers compensate for their services through bid and ask price spreads.
Instant order execution
Your trades are instantly executed under normal market conditions. You are also confident of obtaining the asking price under normal market conditions. Where you click is the price that is bought or sold.
There is no discrepancy between the price shown on the platform and the price where you placed your trade. Remember that most brokers guarantee the exact execution of your orders without requotes. These are instantaneous most of the time, and only in situations of great market volatility, the execution of the orders may experience delays.
Being able to open buy or sell positions
Opportunities exist in the foreign exchange market, regardless of whether your trade is long (opening a buy position to close it with a sell) or short (opening a sell position to close it with a buy), or how the market is moving . You can profit from both bull and bear markets.
Since currency trading always involves buying one currency or selling another, the market does not run a structured course, so there is always the same access to trade regardless of whether it is a market that is growing or declining.
More reasons to trade Forex
The Forex market is a decentralized market that does not use an intermediary and allows the client to interact directly with the market generator of the particular currency pair. Forex traders have faster access and lower costs.
Buy and sell programs do not control the market
How many times have you heard that Fund “A” needed to sell “X” or buy “Z”? This rumor is based on the fact that the funds took the profits at the end of the financial year or because something important will happen today, all this as an explanation of why certain shares rose, or why the market in general is down or is positive.
The liquidity of the Forex market assimilates any fund or bank wanting to control a currency pair. Banks, governments, savings funds, and a long network of individuals are just some of the participants in the foreign exchange market where liquidity is unpredictable.
Analysts and brokerage firms have less opportunity to influence the market
You’ve probably heard lately about an analyst at a prestigious brokerage firm accused of recommending buying stocks when they were rapidly devaluing. This is the kind of nature of the stock market; no matter what the government does to stop and deter this type of activity, this type of behavior will still continue.
IPO’s (when a private company goes public by offering shares) are big deals for both companies and brokers. The relationship is mutually beneficial and the analysts work for the brokerage firms that need the company as a client.
The currency market as a primary market is a global market necessity that generates billions in bank income for the whole world. Analysts in the currency market where they handle market changes, only analyze the Forex market.
8,000 Shares versus 4 Currencies
There are approximately 4,500 stocks on the New York Stock Exchange. Another 3,500 more on the NASDAQ. Which ones to choose? Do you have the time to keep up with so many companies? In the forex market, there are dozens of currency pairs to trade with, but most traders work with only 3-4 pairs. Isn’t 4 currency pairs much easier to handle than thousands of stocks?