Forex vs Stock Market – Advantages of Forex Trading over Stock Trading

Forex market has opened many opportunities that other markets do not have. Even it has many advantages than any other financial markets. This is why most of the traders tend to trade in forex market.

Forex market has opened many opportunities that other markets do not have. The advantages of forex trading over stock trading are given below,

Trading Hours:

Forex market contains the longest trading hours among the financial markets. It is open 24 hours a day, five days per week.

On the other hand, stock markets are open during normal business hours only (generally 4-6 hours). Thus, forex market gives a trader more trading opportunities than stock markets do.

Liquidity:

Forex market is the largest financial market in the world.  Central banks, larger banks, financial institutes, industries, investors, and traders are active 24 hours in this market.

Thus, the forex market is always ready for either side of a trade. The average turnover of the biggest stock market of the world New York Stock Exchange is less than 30 billion per day.

On the other hand, the forex market has an average turnover of nearly 5 trillion US dollar.

Commissions:

Commissions for stock trading are higher than forex trading. This commission becomes larger in the case of short positions.

On the other hand, forex trading has tiny trading commission due to tight spread offers. This advantage of forex trading attracts active traders more than stock markets do.

Leverage:

This is the best advantage of forex market than other financial markets. Stock trading offers maximum 1:5 leverage ratio. On the other hand, forex brokers offer up to 1:500 leverage.

This advantage attracts traders who have a small investment. Trading in forex with high leverage does not carry a higher risk than the stock market.

This is because of a very small fraction of the notional value of the currency to be put up as margin as your trade is based on a rate of exchange, not on a purchase.

Script Selection:

This is a very important part of trading. Stock markets have hundreds or thousands of listed companies. Thus, a traded might get confused during script selection.

Another drawdown of stock trading is when the market is rising it is hard to figure out which company among hundreds will perform most.

In forex market script, the selection is not that tough. Only a few currency pairs have major movements in the forex market. As you do not have to sort some scripts among hundreds or thousands, so it is quite easy to choose that in which pairs you will trade.

Trading Platform:

Online forex trading platforms are well developed with advanced charting and trading options. These platforms also include automated trading opportunity. These platforms are easy to use and trade with from anywhere in the world.