Many people have tried investing in both the stock market and the forex market and have come to the conclusion that investing in forex is better, for a variety of reasons.
So in case you are wavering between the two markets, here are some of those reasons why we think investing in forex might be a better option for you than investing in equities.
First of all, forex is a twenty-four hour market. You can trade at any time of day or night, from pretty much anywhere in the world. Compare this with the equities markets, where you can only trade a the specific times of day when the exchanges are open. What happens if a piece of news comes out that could adversely affect the price of your stock while the market is closed? That’s right, you’re stuck until the market opens and by the time you get your order into the market, the price may have moved substantially against you. Forex, on the other hand, can always be traded.
Secondly, with the forex markets, it is just as easy to go short as it is to go long. So if you are bearish on a particular currency, you can very easily sell that currency to open a short position. In the stock market on the other hand, it is much more difficult to go short. You have to set up a special margin account with your broker and arrange a stock lending facility, which can be expensive. And there are all sorts of rules and regulations around short selling when it comes to stocks. In some countries (e.g. Germany) you are not even allowed to short sell!
Another advantage of the forex markets is the amount of liquidity available in any currency you want to trade. The forex market is by far the biggest financial market in the world, trading trillions of dollars every day. So you will never have any trouble finding a seller if you want to buy or a buyer if you want to sell. Not like the stock market. Just imagine if you had been trying to close a position in Accenture shares on May 6th 2010 for example. There was no liquidity at all in that stock for a short period that day.
Yes, the forex market can definitely be considered better than the stock market in many ways. Is it right for you? Only you can decide.
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