Why FOREX is seen as "a
better" option for investors when compared to Stock Market?
Profit in an up or down market
Unlike the equity market, with FOREX there are no restrictions on short selling. Profit potential exists in the currency market regardless of
whether a trader is long or short, or which way the market is moving. Since currency trading always involves buying one currency and selling
another, there is no structural bias to the market. This means a trader has an equal potential to profit in a rising or falling market.
Pay zero commissions or exchange fees
No commission or exchange fees to trade FOREX online or on the phone. In the equity markets, you must pay both a commission and exchange fees.
The over-the-counter structure of the FOREX market eliminates exchange and clearing fees, which in turn lowers transaction costs. Costs are
further reduced by the efficiencies created by a purely electronic marketplace that allows clients to deal directly with the market maker,
eliminating both ticket costs and middlemen. Because the currency market offers round-the-clock liquidity, you receive tight, competitive spreads
both intra-day and night. Stock traders can be more vulnerable to liquidity risk and typically receive wider trading spreads, especially during
after-hours trading.
Up to 50 times the leverage of trading stocks
Trading FOREX gives you up to 50 times the leverage of trading stocks. In stocks, for every $1,000 cash you invest, you control a maximum of
$2,000 worth of stocks. The maximum leverage is 2:1. But with FOREX, if you invest $1,000 margin on a foreign currency trade, you can control up
to $100,000 in currencies.
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