Forex vs. Equities
Forex market offers several advantages over Equity trading, such
24 hours open market
The biggest advantage of the Forex market over the Equity trading
is that of a 24 hours open market. Active 5 days a week, Forex
market gives its traders what Equity trading does not. Equity
trading is restricted to regular business hours, making Forex, the
only incessantly moving trading platform.
Being a 24 hour trading market, there is always some investors,
somewhere in the world who are dynamically trading foreign
currencies. This also enables these investors to react to any
breaking news of the market, immediately.
Higher trading volume
Also, the trading volume in the Equity trading or the major stock
exchanges is often 100 times lesser than foreign exchange market.
Furthermore, majority traders are willing to buy and sell
currencies because of the need of various countries, which want to
continue to trade goods with each other.
No commission and transaction fees
Forex serves as a more cost-efficient trade as compared to Equity
trading, especially in terms of both commissions and transaction
fees. Most of the sites dealing with Forex trading do not charge
its investors or traders with any commissions or fees, while
offering them, access to all the significant market information
required for trading purposes. But in case of Equity trading,
commissions range from $5 to $100 or more per trade in case of
full service brokers.
Price stability through superior liquidity
The trading volume of the Forex market being 100 times more than
the New York Stock Exchange, there are always dealers willing to
buy or sell currencies here. The superior liquidity of the major
currencies also helps ensure price stability in the Forex market.
But this cannot be the case with the Equity trading which has a
lower trade volume. This can therefore put the investors of the
stock market to liquidity risk, resulting in larger price
Forex market offers higher leverage as compared to all the major
stock exchange trade markets. While the commonly available
leverage from the online Forex dealers is 100:1, the leverage
offered by the Equity brokers is as low as 2:1 margin. Such high
leverage enables the Forex traders to trade much larger sum of
currency than they have deposited. Also that depends on the
types of Forex brokers one
considers for trading.
Forex market enables its investors to trade on the upward as well
as the downward trends of the market, giving them the facility to
buy and sell currencies. This serves as another major advantage of
Forex market over Equity trading. This is because in the equity
market, it is more difficult to trade during downward trend of the
market, due to some market policies. There are a certain
risk aspects as well,
Read more about Risks in Forex