The Benefits of Trading in Forex
You will find that trading in Forex is different from the other forms of trading. Let us examine the advantages and disadvantages of trading in Forex as compared to the Stock Market.
You can trade 24 hours in a day.
Forex market is open round the clock. Forex trading is offered by Forex Capital Markets (FXCM) from 5:15 pm on Sunday to 4:55 Pm on Friday. The Client Service of FXCM is accessible 24 x7. The advantage of Forex trading is that there is no opening or closing bell or a gap in markets. This enables you to enter and exit the Forex trading at any time and customize your trading schedule.
There are no commissions to be paid.
Since Forex trading is confined to the bid-ask spread, it does not charge any commissions. The FXCM is compensated by the mark-up which is added to the bid-ask spread received from liquidity providers. FXCM also can get compensation from the order flow. Commission may, however, be charged to certain classes of accounts such as Active Trader.
The information on Forex is more reliable.
When you are dealing with stock market, you would need to analyze the data from thousands of stocks for doing the trading in a proper manner. As far as Forex trading is concerned, you only need to keep track of six major currencies of the world. Another problem with the stock markets is that a large portion of the data available on companies may not be correct and it is easy to get deceived by fraud and insider trading. In Forex market, all the data about currencies are available in public domain and most of the research is done transparently by reliable government and other research institutions.
Experience in Stock Trading is useful in Forex Trading.
Your expertise in Stock Trading can be used beneficially in Forex Trading also. The commonly used economic indicators in stock trading such as payroll data and interest rates also are relevant to Forex Trading. Also the technical indicators such as Candlestick Charting, MACD, RSI etc. are pertinent in Forex trade also as currencies also appear to respond to these indicators.
Forex is not suitable for all traders
The level of risk in Forex trading is high as compared to stock market. Since you are given a higher amount of leverage the loss can also be higher sometimes. The factors to consider before venturing into Forex trade are your risk appetite, investment objectives and also level of experience. It would be prudent to take the help of a financial advisor before committing funds to forex trading.