Why Trade Forex
Online forex trading has become very popular in the past decade because it offers traders several unique advantages. Learn more of its advantages by comparing equities which is one of the most common financial products.
Experience and knowledge in trading and analyzing stocks can easily be transferred to the forex market. Many of the economic indicators familiar to equity traders, such as payroll data and interest rates, affect the currency markets. Also, many technical traders would find the forex market to be particularly attractive, since currencies respond well to many of the common technical indicators, such as MACD, RSI, and Candlestick charting.
Forex vs. Stocks Advantages | ||
|---|---|---|
Advantage | Forex Market | Stock Market |
Trade Around the Clock | ✓ | ✗ |
Low Trading Cost | ✓ | ✗ |
Unlimited Short-selling | ✓ | ✗ |
Market Liquidity | High | Low |
Market Information Easily Available | ✓ (Focusing on 6 major currencies) | ✗ (Too many stocks to choose from; some vital information is proprietary or private) |
FOREX NEVER SLEEPS
Trading goes on all around the world during different countries’ business hours. Trader can trade major currencies at any time, 24 hours per day. With the ability to trade around the clock, currency traders have the advantage of customizing their own trading schedule; they can usually get in or out of the market at any time without waiting for an opening bell or encountering a market gap. While trading stocks after usual market hours is possible, very often that possibility is negated by a lack of order flow or a drastic widening of the bid-ask spread.
LOW TRADING COST
No expensive exchange fees or custody fees are associated with most forex accounts. At Rakuten Securities HK, Rakuten FX offers $0 commission with tight & fixed spread to our clients.
Rakuten FX | |
|---|---|
$0 commission | Tight & fixed Spread |
GO LONG OR SHORT
Unlike the equity market, there are no limitations on short selling in the forex currency market, no matter which way the market is moving. If you think a currency will go up, buy it. If you think it will fall, sell it. This means there is no such thing as a bear market in forex – you can make (or lose) money any time.
UNMATCHED MARKET LIQUIDITY
Forex market size is huge as $4 trillion a day. Its size, plus the fact that most trading concentrated in only a few currencies, makes it available to a lot of traders without any constraint on trade size, time or getting in and out the market.
INFORMATION ACCESSIBILITY
Forex traders may only focus six major currencies to research. Virtually all of the news that bears on the forex market is in publicly disseminated reports from governments or research institutions, and released to everybody at the same time.
Information about stocks is abundant, but so are the stocks. Finding a trade opportunity in the equities markets may mean sifting through data on thousands of stocks. Additionally, the vital information that moves equity markets, such as revenues and profits, is proprietary and private.
