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Why Trade Forex? Advantages of Forex Trading, Forex vs. Stocks vs. Futures

Why Trade Forex? Advantages of Forex Trading, Forex vs. Stocks vs. Futures

Forex is the biggest and the most convenient currency exchange market with a daily trade value of around 7 trillion USD. If you are hesitant about to jump on the bandwagon of forex trading, have a look at its advantages –

Easy entry – It doesn’t cost much to open a forex trading account. With mini and micro trading accounts, you can become a currency trader even if you lack a lot of initial trading capital.

No fixed lot size – There is no fixed lot size in Forex like futures markets. Forex platform gives freedom to the traders to determine their lot or trading size. An individual trader can start with a small amount like 25 USD at FX.

A 24-hour market – Forex is the only trading market place which operates 24 hours a day and provides current exchange rates to the traders enabling them to select their best trading time to earn profits.

Minimum transaction cost – At Forex, transaction cost per bid or trading is less than 0.1% (under normal market conditions) and with larger transactions, it can reduce further up to 0.07%.

No monopoly – This means that Forex market so huge and caters to so many millions of traders that a single entity can never affect its rates or trading scenario for a very long time.

Leverage – Forex provides higher leverage than what you generally get with stock trading. For instance, if the leverage is 100:1, for every 100 USD in the trader’s account, the trader can trade up to 10,000 USD in value. Though a double-edged sword, with proper management you can use the leverage profitably.

Why Trade Forex: Forex vs. StocksWhy Trade Forex: Forex vs. Stocks

Well, it’s an individual’s call to choose what he wants to trade, for stocks or currency. Many people prefer to go to the Forex Market place. Why? Think yourself as, one side you have the option to trade on stocks exchange like NYSE (New York Stock Exchange) which trades around 2800 kind of stocks with another 3100 listed on NASDAQ while on the other hand, there is FX market place which also trades in hundreds of currencies, but majority of this market play is run by 4 major currencies only. Now, its pure mathematics that managing and keeping an eye on these four currencies is more comfortable than reading the running screen with stats data of the 2800+ companies. Other pros of trading on Forex are –

24 hours market place – Forex market place remains open and active for 24 hours as it does not have any centralized location and solely runs over the internet.

Less commission more profit – Forex charges minimal or next to minimum commissions as compared to other trading markets like stocks or Future.

Instant action – Forex believes in instant trading; usually, the price you trade on is the same as you get back. No biasing at all.

No middlemen – Usually some middlemen remain between the transactions and costs a trader in terms of money and time. On the other hand, Forex is the neat platform with no centralized center, every Forex dealer offers varying rates, ultimately providing options to a trader with best offers.

Forex is resistant – FX is resistant to brokerage firms and even entities like Super banks cannot affect its exchange rates.

Why Trade Forex: Forex vs. Futures

Forex market place is the giant in the trading industry and allows trading in every kind of currency. Furthermore talking about its trading ways, traders usually deal either in Currency Futures or in Spot Forex Market. Both of them are nothing but investing options among which Future is a transferable future contract in which a pair of currencies is involved. This contract specifies the price in currency A depending on another currency B that can be bought or sold on a fixed date. However, Forex Spot does not bind a trader for future dates; it delivers the required financial instruments or funds instantly.

Forex is way better than Future in many aspects, few of them are as follows –

Liquidity – Forex is the most prominent market place which trades around 5 trillion dollars on a routine daily basis, whereas Future market hops to 30 billion dollars per day. Interesting numbers isn’t it.

Round the clock market – Forex market place, runs for 24 hours, five days a week and its worldwide currency exchange booth guarantee it. The Future Market place has a fixed running time.

Tiny commission – Forex dealers generally do not charge any commissions and if they do they are very merely charged, while Future market cuts traders pocket big.

Price Certainty – There are guaranteed price certainty and price execution when on does trading on Forex whereas Futures and equities do not. Even when the electronic mediums are there, Futures market place still act as an orthodox platform with no certainty of price.

Guaranteed Risk limit – Forex market place guarantees minimum risk on trading but when it comes to Futures, all risk factors are there.

2 Comments

  1. Alisha Shakya on August 8, 2019 at 2:18 AM

    With regards to risk to profit ratio, Forex trading has lower risk and good opportunity of making a profit compared to stocks. Ease of transaction, 24 hour market, minimum commission, no controlling entity are the primary reason that attributes this feature to Forex trading.

  2. Shishir sapkota on August 16, 2019 at 12:57 AM

    Its really useful . I got many information regarding forex trading.

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