Wednesday, December 4, 2013

The Pros of Trading Currencies vs Stocks

When the everyday person comes across the topic of investing or trading in the markets, the first thing that comes to mind is the Stock Market. Why? Because it is the mainstream asset we see in commercials, movies, advertising, and what most people talk about. Therefore its normal to have a bias towards starting in this market since it is what you have been exposed to the most. If you are someone who is or looking to start trading and investing yourself (a "Retail Trader"), I'm here to tell you that the stock market is not the way to go unless you are looking for long term plays.
I have been on wall street and seen how large banks and hedge funds make it extremely difficult for the Retail Traders (us) to turn a profit. I have also experienced it myself. Large banks compete each day, buying and selling different stocks in the with hundreds of thousands of dollars per trade. They do this to be the largest holders of these specified stocks to help make the stock liquid to route to hedge funds. Because of these constant high end purchases, high price swings occur, creating higher volatility and risk for the retail trader in the short term (intraday, weekly). The Forex Marke
t allows retail traders to avoid this manipulation of prices.
The foreign exchange market, commonly known as the Forex Market, is the largest financial market in the world. The Forex market has an average daily trading volume of over $5 trillion compared to the largest stock exchange in the world, the New York Stock Exchange (NYSE), which has a daily trading volume of $60 billion. The Forex Market offers many advantages that other markets don't, or may not on a consistent basis:


1) No Commissions  
2) Trade in any direction of the market without special capital requirements
3) 24 Hour Market

4) Leverage
5) High Liquidity 
6) Globally Connected
7) Low Capital requirements to open an account. 

To the right you can see a comparison of the some of the differences in trading Stocks vs. Forex. 




















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