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Forex VS Other Markets
Profit In Both Ends.Forex has one crucial benefit over the equity
market: Forex has no restrictions on short selling. Traders may go long or
short, facing the market fluctuations, but the potential of getting income
remains very high. This two-fold nature of getting profits makes Forex
attractive to most of the traders. Either the market is rising, or falling -
smart and professional traders make money on it.
Commissions Free.Another Forex benefit over the equity market is that
on Forex you do not have to pay commissions and spread. Forex OTC (over-the
counter) avoids exchange and clearing fees, which in turn cuts transaction costs
sufficiently. As clients on Forex can deal directly with the market maker, more
money is saved. Plus, this market works 24 hours a day!
Compare The Leverage.Forex offers unimaginably high credit leverages.
In stocks, for every $1,000 cash deposited, you control not more than $2,000
worth of stocks. So, the credit leverage is very small - 2:1. On Forex for the
same deposit of $1,000, you can trade up to $100,000. 100:1 leverage is quite a
bargain.
News Make Money.Traditionally markets remain very sensitive to
important news which may have influence upon trades. Interest rate and changes
in it serve as a perfect example of such news. Judging what effect this may have
upon the market is not an easy job. Still there is a consensus beforehand as to
what the interest rate move is going to do. As the meetings of BOE, FED, ECB,
BOJ, and other central banks are quite predictable and scheduled in advance, one
may have good way to make money on interest rates with Forex.
Easily And Quickly Diversify Out Of U.S. Dollars.The trade balance
shows the net difference over a period of time between a nation's exports and
imports. When a country imports more than it exports, the trade balance will
show a deficit, which is generally considered unfavorable to that nation's
currency. Many investors know that they should diversify some of their assets
into foreign currencies, but to do so is difficult. Most U.S. banks, for
example, do not offer foreign currency accounts. But by trading Forex, you
instantly control hundreds of thousands of dollars worth of foreign currencies.
For every $1,000 margin deposit, you can control up to $100,000 worth of Euros…
or British Pounds… or whatever currency you believe will rise in the future.
If You Like Technical Trading, Forex Is Perfect For You.Unlike stocks,
currencies rarely spend much time in tight trading ranges and have the tendency
to develop strong trends. Over 80% of volume is speculative in nature and, as a
result, the market frequently overshoots and then corrects itself. A technically
trained trader can identify new trends and breakouts, which provide multiple
opportunities to enter and exit positions.
Analyze Countries Like Stocks.Currencies are traded in pairs so if a
trader "buys" one currency he is simultaneously "selling" the other. As with a
stock investment, it is better to invest in the currency of a country that is
growing faster and is in a better economic condition. Currency prices reflect
the balance of supply and demand for currencies. Two primary factors affecting
supply and demand are interest rates and the overall strength of the economy.
Economic indicators such as GDP, foreign investment, and the trade balance
reflect the general health of an economy and are therefore responsible for the
underlying shifts in supply and demand for that currency. There is a tremendous
amount of data released at regular intervals, some of which is more important
than others. Data related to interest rates and international trade is looked at
the closest.
Trade 24 Hours A Day.After-hours stock trading is not a very
liquid or easy market to trade. But with Forex, you can trade 24 hours a day --
in the largest, most liquid market in the world. That means you never have to
"just say no" to trading.
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