Stocks has no chance! Open an account Learn more. So if the stock market is so popular, why would someone choose to trade on the Foreign Exchange market? The truth is that Forex is the cheapest market to trade in the world. There are another stocks listed on the NASDAQ exchange, so you can see how picking a stock to trade can be overwhelming.
Combined with the tight, consistent, and fully transparent spread, forex trading costs are lower than those of any other market. Your trades are instantly executed under normal market conditions. Under these conditions, usually the price shown when you execute your market order is the price you get. Keep in mind that many brokers only guarantee stop, limit, and entry orders under normal market conditions. Fills are instantaneous most of the time, but under extraordinarily volatile market conditions, like during Martian attacks, order execution may experience delays.
Unlike the equity market, there is no restriction on short selling in the currency market. Trading opportunities exist in the currency market regardless of whether a trader is long or short, or whichever way the market is moving. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market.
So you always have equal access to trade in a rising or falling market. Centralized exchanges provide many advantages to the trader. However, one of the problems with any centralized exchange is the involvement of middlemen. Any party located in between the trader and the buyer or seller of the security or instrument traded will cost them money. The cost can be either in time or in fees. Spot currency trading, on the other hand, is decentralized, which means quotes can vary from different currency dealers.
Competition between them is so fierce that you are almost always assured that you get the best deals. Forex traders get quicker access and cheaper costs. The stock market is very susceptible to large fund buying and selling.
In spot trading, the massive size of the forex market makes the likelihood of any one fund or bank controlling a particular currency very small. Banks, hedge funds, governments, retail currency conversion houses, and large net worth individuals are just some of the participants in the spot currency markets where the liquidity is unprecedented. The foreign exchange market however opens around 8 am Sydney time on a Monday in Australia, and closes around 5 pm New York time in the United States on a America Friday.
The freedom to trade when you want allows you to integrate trading into your busy life easily. Especially when you use end of day trading strategies. They make their money through spreads by selling currency to you at a slightly higher price than what they can buy it for , which are dirt cheap when compared to the stock market. Brokers are able to offer cheap spreads and make good returns due to the sheer volume of Forex transactions that they experience on a daily basis. The truth is that Forex is the cheapest market to trade in the world.
To begin trading stocks you need to have a lot of initial capital to be able to make reasonable returns. This is because the stock market offers very low leverage. The stock market only offers about 1: Forex brokers generally have a larger range of leverage options available. A leverage ratio of 1: There are another stocks listed on the NASDAQ exchange, so you can see how picking a stock to trade can be overwhelming.
The stock market is vulnerable to price manipulation. Large companies can force certain stocks to move by buying or selling them in large amounts, driving the smaller traders out of their positions.
Because of the epic scale of the Forex market, no one company or bank can forcefully move the Forex market like they can in the stock exchange. The amount of money required to force a currency to move is just beyond the capabilities of large companies, even single banks cannot force currency prices to move in their favor.
In the debate of Forex vs stocks, the Forex market really shines here. During stock market crashes it is possible for short selling bans to be put in place by the stock exchange. This means you cannot open any new short trades. During market crashes it is very hard to find buyers for your crashing stock.