Top 7 Reasons Why Currency Trading Kicks Butt Over Stock TradingIf you haven't looked into or been involved with currency trading or investments, you may want to consider this lucrative alternative to stock trading. The Forex (FX) Market is by far the largest market in the world with over $3 Trillion traded EVERY SINGLE DAY! Yet despite its size, many people have never heard of it. This was largely due to the fact that currency trading was simply not available to the public before January 1998. Prior to that, only those with large amounts of capital, such as banks, institutions, large corporations, and high net worth individuals were able to participate in currency trading. With the advancements in computer and Internet technology, the Forex has become accessible to smaller individual investors. There are seven main reasons why currency trading kicks butt over traditional stock market trading: Liquidity With over $3 Trillion changing hands daily, the FX Market is extremely liquid. This means that with a click of a mouse you can instantaneously buy and sell at will. Whether it's 6pm or 6am, somewhere in the world there are always buyers and sellers actively trading foreign currencies. This means that you won’t get 'stuck' in a trade if the market is going against you, like you can when trading in the stock market. Also, because you’re positioned in currencies (at least that's what underlies all of your trades), you won’t ever be left holding the bag with shares that cannot be redeemed because that company has gone bankrupt. Trading Hours Unlike the stock market, the Forex Market has no physical location and no central exchange. It is a 100% completely electronic worldwide market that never sleeps. Consequently, it is open 24 hours a day, 6 days a week from 5pm EST Sunday to 4pm EST Friday. That means you can trade at almost any time, morning, day or night. You can always work currency trading into your schedule. Leverage In the currency market, a little goes a long way. In the stock market, the maximum leverage is 2:1, meaning that for every $1,000 of cash you invest, you control a maximum of $2,000 worth of stocks. That leverage also increases your potential for profits and your risk by 2 times. Currency traders are permitted to trade/invest in foreign currencies on up to 400 times their investment but without taking on 400 times the risk. This allows you to make extraordinary profits with a small investment and at the same time keep the risk of your capital to a minimum. Slippage Slippage is common in the stock market. It occurs when illiquidity in the market causes delays in the execution of trader's orders and their orders are filled at a different (and unfavourable) price from the market rate when the order was initially placed. To add insult to injury, traders may also experience difficulty in exiting or selling positions, which greatly compromises the ability to clear profitable trades. In the Forex Market, there is virtually no slippage. Due to the tremendous amount of volume and liquidity that the FX Market generates, your orders will almost always be filled instantly at the price they were placed at. This means that there is no time for the price movement that you are capitalizing on to disappear while you are waiting for your order to be filled. Transparency vUnlike other markets where transparency is compromised (like in the Enron scandal), the FOREX Market is highly transparent. Everything is laid bare before your eyes on your computer screen as the exchange rates between currency pairs fluctuate. There is no complex backroom office activity, or no clearing house. The share price of any one company on the stock market can easily be manipulated. It is infinitely more difficult to manipulate the price of a country’s currency. Low Account Minimums It is very difficult to find a stock market margin account that you can open for less than $1000. Furthermore, with many stocks valued anywhere between $30 and $200 per share, the purchase of one lot of 100 shares can mean an investment of $3,000 to $20,000 or more. On the other hand, “mini, super-mini or micro” Forex accounts can be opened for less than $300, and at the least one can be opened for only $50. These small accounts enable you to take smaller risks. Even more, almost all the Forex brokerage companies offer demo accounts which you can use to practice (paper trade) with virtual (pretend) money before you go live with real money. Profit in Both Bull and Bear Markets When trading in the stock market, there are usually restrictions placed on selling or “shorting” a stock which can limit one’s ability to profit in a bear (down) market. Because currencies trade in pairs, there are no such restrictions, therefore one can just as easily "short" a particular currency as go "long". In addition, regardless of whether there is a bear market or a bull market, people, banks and countries still need to exchange currencies. In fact, since the Forex Market is quite speculative, you can make money no matter which way the exchange rate between a currency pair goes. There is no question that currency trading offers huge profit potential. If you love the idea of being able to make big profits for small risk amounts with just your computer and an Internet connection, no matter what the stock market is doing, look to the Forex currency trading market. With proper instruction and good money management practices, it is an exciting and potentially lucrative way to earn an excellent income online and a powerful addition to your arsenal of financial freedom tools. Go back to earn money online
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