Advantages of Forex Trading
(vs. Stock Trading)
1. 24-hour trading. If you live in the United States and want to trade at 1:00 AM, that Forex is still trading, while the US stock markets are not.
2. Low transaction costs. With Forex, you don’t pay commission fees to your broker like you do with stocks. The broker usually makes their money by widening the bid/ask spread by a few pips.
3. Leverage. The percentage that currencies actually move is very small relative to stocks. However, most Forex brokers allow you a buying power of 100:1 or more on your deposited money. That means on a $1,000 deposit, you can control $100,000 worth of currency which allows you to make (or lose) a lot more on each trade.
4. High liquidity. Trillions of dollars worth of currency trade hands every day on the Forex market. So for the major currency pairs especially, it is always easy to get in and out of trades.
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