There are not one or two advantages to FX trading. There is an entire list of benefits. It is the many pros that are leading more and more traders into swapping out of stock markets and into the foreign currency exchange. The myriad of reasons forex is better than the stock market are shared here to help you decide if it is the right path for you or something you would like to diversify into. Often the best choice in investing is to diversify to ensure the best possible profit.
FX Trading with No Commissions
Spot currency trading does not carry commissions on trades. There is a fee called a spread in which the buy and sell rates are usually a few pips different. It is how the dealer makes his money FX trading. It does not mean there are absolutely no other fees to forex because anyone who decides to trade futures, options, ETFs or ETNs will find other fees do apply.
No government fees does not mean there are no taxes; however, you do not have any additional fees to pay other than taxes on income. The stock market does have commissions and various fees associated with it.
Spot trading is done with market makers or dealers. The bank is responsible for setting the trading prices meaning there is no middle person. The rates are not going to change from the bank to the dealer. The only change is how much spread they will charge, which does vary between brokers. You can also choose a platform that allows you to trade directly with the market without a dealer in the middle.
Lot sizes are fixed only in the beginning increment for FX trading. You might see 1,000, 10,000 or 1 million for the lot size, but you can decide how many you trade such as 5,000. You also have leverage, which helps you to put more into your investment than you have such as using 1,000 unit lot sizes where you have $25 AUD in your account.
Leverage is considered a benefit and a curse to trading. Leverage provides you a way to put more into the trade than you have in your account. However, it can also be a bad thing because you can hit margin call on a bad trade with too much leverage.
FX Trading Cornering the Market
It is not possible to truly gain the market as a single entity. No central bank can control FX trading and no person can, which is why it is easy for you to find a small corner for you to make profit with.
It is also an open market in terms of hours. Depending on where you live it might be a Monday through Saturday market or a Sunday through Friday market. New Zealand is the first to open, with Australia following a few hours later. After New York closes on Friday things stay closed until it is Monday in New Zealand; however, it is still Sunday in New York. With 24 hours of FX trading you have plenty of choices to make profit.
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