You have had a desire to begin trading in the markets. You probably have heard allot about the stock market and its benefits, but what about trading forex. What are the advantages or disadvantages to trading forex over the stock market.
Lets begin by going over the major differences between the trading the forex market and trading the stock market. Well we have all heard about the scandals in the past regarding insider trading and stock manipulation in the stock market, but why have we not heard about any insider trading going on in the currency markets. You see the stock market has wall street as a centralized location. Where is the forex market located? Well it has no one specific location. Currencies are bought and sold between large financial institutions, businesses and different countries everyday. Prices in the currency market will fluctuate for a variety of reasons including news releases, trade reports,each countries economic conditions, etc. The forex market cannot be manipulated by any one person, so you can rest assured that your investment will not be affected by any fraudulent scam.
It takes an enormous amount of money to move the forex market in any one direction. Over two trillion dollars a day is traded in the forex market. Yes you heard me right, two trillion dollars. The stock market does not trade two trillion dollars in one month. I hope you can see now why it would be incredibly difficult for any one person or entity to move the market for any extended period of time. Another major difference between the trading forex and trading the stock market is leverage. When you open a forex trading account through a brokerage firm, you will generally be given 100:1 leverage. You can actually control $10,000 with a $100 account. While that sounds good. It can also hurt you if you do not know what you are doing. There are literally thousands of stocks to choose from. While there are only a handful of currencies that you would have to track makes it much easier to make a decision on what you will be trading.
One of the last things I want to go over is market hours.Since the forex market is a global market,time zones can vary greatly from country to country. Because of this fact, the forex markets are open for trading 24 hours a day. Since you are not limited to the normal business hours of the stock exchange, you have much more flexibility on the hours you choose to trade. This is not an exhaustive list of differences, but I hope you now have a better understanding of some of the major differences between Trading Forex and the Stock Market.
Eric Medina provides many more Free Forex Tips at www.forexprolive.com Get more info on Forex Trading signals and an exclusive live trading group focused on the Forex Markets
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