My goal for writing this post is to demonstrate to you the benefits of trading on the FOREX marketplace. Nonetheless, there is one myth that I want to dispel before I go further. The myth is that there is a distinction between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Business, who wrote "If It Doesn't Go Up, Do not Invest in It". He stated "Everybody who invests is a trader, only the time period is distinct." It is a lesson that I took seriously just after taking a beating in the stock marketplace in 2000.So now, let's compare features of currency trading to those of stock and commodity trading. Liquidity - The FOREX marketplace is the most liquid monetary marketplace in the globe around 1.9 trillion dollars traded daily. The commodities marketplace trades around 440 billion dollars a day, and the US stock marketplace trades around 200 billion dollars a day. This ensures greater trade execution and prevents marketplace manipulation. It also ensures conveniently executable trading. Trading Instances " The FOREX marketplace is open 24 hours a day (except weekends) which indicates that in the US it opens at three:00 pm Sunday (EST) and closes Friday at five:00 (EST), permitting active traders to opt for the times they want to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Like extended trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays. Leverage " Depending on your FOREX account size, your leverage will probably be 100:1, despite the fact that there are FOREX brokers that offer you leverage of up to 400:1 (not that I would ever advise that type of leverage). Leverage in the stock marketplace can be as high as four:1, and in the commodities marketplace, leverage varies with the commodity traded but it can be very high. Given that the commodity markets are not as liquid as the FOREX marketplace, its leverage is inherently riskier. While I was by no means shut out of a commodity trade by the day limit, the fear was generally in the back of my thoughts. Trading expenses " Transaction expenses in the FOREX marketplace is the distinction between the purchase and sell price tag of every single currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction expenses and brokerage fees. Even when you use discount brokers, those fees add up. Minimal investment " You can open a FOREX trading account for as little as $300.00. It took $five,000 for me to open my futures trading account. Focus " 85% of all trading transactions are produced on 7 main currencies. In the US stock marketplace alone there are 40,000 stocks. There are just over 200 commodity markets, despite the fact that very a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer quantity of instruments permits us to study every single one additional closely. Trade execution " In the FOREX marketplace, trade execution is practically instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent. Whilst all of these features make trading the FOREX marketplace particularly attractive, it still calls for a lot of education, discipline, commitment and patience. All trading can be risky.
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