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Foreign exchange and stock comparisons all over the Internet are going to show the benefits of selecting to trade in foreign exchange. Of course if you are searching for long-term investment then that is another thing, but for speculative traders the forex has many special features that make it particularly tasty. Here are the top 5 reasons for choosing forex trading over stock trading.  

1. 24 Hour Market

One practical advantage of the foreign exchange market is that it is open for trading twenty-four hours per day Monday thru Fri.. This is as of the worldwide nature of the market and the proven fact that it is always business hours somewhere in the world, excluding weekends and vacations. So a forex trader can work a real job and trade in the evenings or early mornings.

2. Liquidity

Currency is liquid by definition, if liquidity measures the ease of changing an asset into money. More often it is taken as the quantity of money in a market. On this, too, currency scores really high.

Turnover in the forex market was almost $4 trillion each day on average according to a survey by the Bank For international Settlements in December of 2007. It has probably surpassed that now.

This is considerably more than is traded on all of the stock markets in the world added together. In foreign exchange you aren’t limited to trading in your own country or on your own country’s currency, so the advantage to this trader of being part of this large market is clear. You have got a much better likelihood of getting the price that you see or the price that you need.

3. Openness

an additional benefit originating from the sheer amount of money in this market and its high trading volume, is the openness of the market. There’s very small opportunity for insider dealing in a market which deals with the commercial performance of entire countries and involves each major monetary establishment in the world. This implies that the retail trader is not off balance to the extent that might be accurate in the exchange and lends more weight to our forex stock debate.

4. Leverage

Leverage is the trader’s most necessary tool in that it permits a small fund to manipulate a huge position size, resulting in an enormous proportionate ROI, assuming that you are profitable. The leverage offered by foreign exchange brokers tends to be higher than in stock trading.

In foreign exchange, one hundred times leverage is seen as standard or low, two hundred times is common and four hundred is possible in some circumstances. Naturally this makes forex trading intensely risky except for a successful trader it is a significant advantage because it means more money can be made of less.

5. Trade Both Directions

When you trade currency exchange, you’re always dealing with a currency pair, exchanging one currency for another. This suggests that you can trade in both directions. As an example if you are trading EUR/USD, you can start by investing in either euros or US greenbacks depending on which one you think will rise. So you can sell or buy the pair ( go long or go short ).

In a sense this is like trading stock options or futures, but with more flexibility. The flexibility comes from the fact that currency values are relative to one another. They can not all fall at the same time, as stocks can. So this is another point for forex in the currency exchange stock comparison.

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