Why Trade Forex? Why Currency Exchange Stumps Stocks For New Investors


This is a contributor’s blogpost …


Cryptocurrency is all well and good, but the recent roller coaster ride that is the fluctuation in the value of bitcoin has left many investors thinking twice about dabbling in the theoretical. While they may have a point, this thinking is probably rather rash. Like any commodity, as long as people are trading in it, Bitcoin will still have some value. Nonetheless, the fast plummet from all time high to terrifying low (which could drop to as much as 50% according to an early investor) has led many to turn their attention towards more traditional investments. This inevitably means a tug of war between two of the seasoned investor’s old faithfuls… Forex and stocks.


What is Forex?

If you’re new to the world of investment, Forex might be one of those prohibitively vague sounding names like Etherium or Monero. Fear not, however, Forex is merely a contraction of the words Foreign and Exchange. It pertains to the buying and selling of international currencies for other currencies thereby making a profit. It sounds complicated, and (full transparency) it is! It can be made a lot simpler and more accessible, however, when you have the right combination of a reliable broker and an easy to use trading platform. Indeed a good broker will also be able to offer you their own native “prop” platform or even a selection of platforms. Check out trustedforexbroker.com for a good example. Whether you’re a brand new investor or a seasoned veteran who just wants to improve their game, when you have these measures in place it’s easy to see why trading currencies trumps trading stocks any day…


24-hour trading

Many investors begin their exploits alongside a day job within normal working hours. Unfortunately, this means that during most of their free time, the markets aren’t even open. This can at best impede your ability to buy and sell at the right time or at worst prohibit you from trading altogether. Fortunately for the busy bee, international currency markets are open 24 hours a day, 7 days a week.


Little or no commission

Trading in stocks is often a long winded affair involving administrative processes that tend to require sizeable commissions. These commissions may not break the bank, but they can take a healthy chunk out of your profits. Forex brokers, on the other hand charge no transaction fees, commissions or other additional charges. Even when trading costs do occur they’re far less expensive than those of any equivalent trading market.


Unlimited short selling

Short selling is when an investor sells a security that they do not own but rather have borrowed. Short selling is most often favoured by investors who suspect that a security’s value will decline and they want to be able to buy it back at a lower price to make a profit. For obvious reasons this is heavily restricted in the stock market. Foreign currency trading, on the other hand, offers equal access to both rising and falling markets.


Analysts have little effect on exchange rates

Stock market analysts have had a disproportionate influence on the values of stocks for a long time and as long as brokerage firms and IPOs depend on each other this will only ever continue to happen. Foreign exchange analysts, on the other hand, hold little sway over the market.


Author: Urban Ponder Writing Team

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