Feb 08 2007
Forex Vs. Stocks
Forex Vs. Stocks
For a number of reasons, Forex trading appeals to more people than the stock market. One of the reasons is the chance for a much greater return. Foreign currency fluctuations of just one or two percent, occurring on a daily basis, have a chance of returning great rewards to an investor who catches a wave of change and properly plans his entrance and exist strategy. Many people also like the fact that more leverage is available with foreign currency exchange. For example, 10,000 dollars can be leveraged to purchase as much as 100,000 dollars through margins. This allows the chance of great returns, even at only one percent, with less risk than might otherwise be necessary.
The Forex market is open 24 hours a day for trading while the stock market is only open during business hours. A Forex trader can literally work 24 hours a day, moving from the Asian market to the European to the American. Couple this with the leverage opportunities then the chances of large profit with Forex are phenomenal. Also, Forex trading is done without paying commissions, which can amount to significant savings.
Many people who don’t understand Forex and have some experience with the stock market immediately think that it is risky and has low profit margins. They come to this conclusion because less information is available on Forex than other types of trading. Forex requires a trader to educate him or herself. A Forex trader needs to read newsletters and find other ways of self-education rather than just turning on CNN or CNBC.
Stocks have their advantage as people can invest in the stock market without knowing too much and will probably do fine. If an investor buys blue chip stocks they are unlikely to go down in value. For long-term savings stocks are fine, but the short term large gains are definitely to be found with Forex.
Many people don’t realize how large the Forex market is. It is so huge that no single investor can corner the market as has happened in the past with some stocks, and also with some precious metals and commodities.
The Forex market is appealing if you’re willing to learn to educate yourself and trade intelligently.
