My goal in writing this article is to show you the many advantages of the Forex market. However, there is a mystery that we must uncover before I go further.
The puzzle is that there is a difference between trading and investing. To unveil this point I will quote the saying of Al Thomas, president of the Williams Investment Company, who wrote “If it doesn’t go up, don’t buy it.” “Anyone who invests is a trader, only the time period is different.” This was one of the lessons I took very seriously after I experienced a stock market loss in 2000.
Now let’s compare the characteristics of Forex trading with those in the stock and commodity markets.
Liquidity – The Forex market is the most liquid market in the world with around $ 1.9 trillion traded daily. The volume of trading in commodity markets reaches about 440 billion dollars per day, while the volume of trading in the US stock market is close to 200 billion dollars per day. This ensures better execution of deals and prevents market manipulation. It also ensures ease of execution of trades.
Trading Times – The Forex market is open 24 hours a day (excluding weekends) which means that it opens in the United States at 3:00 pm Sunday (EST) and then closes at 5:00 ((EST) which is This allows active traders to choose the trading times that suit them. The commodity trading hours vary according to the commodities being traded, including the extended trading times, the US stock market trades can take place between 8:30 am and 6:30 pm (EST) on weekdays .
Leverage – Depending on the size of the Forex account, the leverage may reach 1: 100, although there are some Forex brokers that provide leverage of up to 1: 400 (I can never recommend such leverage). Leverage in the stock market may reach 1: 4, and in commodity markets, the leverage varies according to the commodity traded, but it may be high. Since the commodity market does not have the same liquidity as in the Forex market, your leverage is extremely dangerous. Although I have never closed a commodity trade at the daily limit, fear has always been in my mind.
Trade costs – Transaction costs in the Forex market are the difference between the bid and ask price for each currency. There are no brokerage fees. For commodity and stock markets, there are transaction costs and brokerage fees. Even if you are dealing with discount brokers, these fees will be added.
Minimum investment – You can open a Forex trading account for about $ 300, while it requires me $ 5,000 to open a futures trading account.
Focus – 85% of all forex transactions are done on the basis of seven major currencies. While in the US stock market alone there are 40,000 shares. There are over 200 commodity markets, and although they are somewhat few, they are not that many of them are not liquid and therefore are traded only by hedgers. As you can see, the fewer financial assets, the more opportunity will be given to study each one more closely.
Trading Execution – In the Forex market, execution of the trade takes place almost instantly. In both the stock and commodity markets, you depend on the broker to execute your deals and its results may be contradictory at times.
Having all of these advantages makes Forex trading attractive,
Though it still requires a lot of education, discipline, commitment and patience. All types of trading can be risky.
The Forex market can trade at any time 24 hours a day (from Sunday to Friday evening). Therefore, instead of having to trade during normal business hours, you can trade at the time that suits you. No matter where you are in any part of the world, you can always do trading and more hours of trading mean more trading opportunities. The trading platform can be loaded onto your business devices such as iPhone, iPad and other smartphones, allowing you more flexibility and convenience.