Forex vs. Stocks
There are many reasons why forex trading might seem sexier than stock trading.
24-Hour Market The forex market is a 24-hour market. Most brokers are open from Sunday 2PM EST until Friday 4 PM EST. Customer service is available 24/7. With the ability to trade during the U.S., Asian, and European market hours, forex trading offers great flexibility, allowing you to tailor your trading schedule.
You can trade the stock market only during normal business hours.
8000 Stocks vs. 4 major currency pairs Approximately 4,500 stocks are listed on the New York Stock exchange, and another 3,500 on the NASDAQ. The stock trader has to decide which exchange to follow, and which companies to research and monitor. This could be mind-boggling.
In spot currency trading, there are 4 major currency pairs - EUR/USD, GBP/USD, USD/JPY and USD/CHF. Most traders choose to concentrate on the major currency pairs (though some choose to branch out to the second-tier currencies). This is a far simpler scenario than stock trading.
Commission Free Trading Most online forex brokers charge no commission or additional transaction fees. With the buy and sell prices, what you see is what you get. Forex trading costs are lower than those of any other market. Forex brokers are compensated through the bid/ask prices (spread), interest on deposited funds, and rollover fees.
Greater leverage Forex trading offers greater leverage than traditional stock trading, allowing you to control larger positions with smaller amounts of capital. This lets you trade the same size positions you might take with a stock broker, leaving you more available capital to trade other markets.
Instantaneous Execution of Market Orders With forex, under normal market conditions your trades are instantly executed and you also have price certainty on market orders. The price you click is the price you get. You're able to execute directly off real-time streaming prices. There's no discrepancy between the displayed price shown on the platform and the execution price to enter your trade. Fills are instantaneous most of the time.
The stock market offers no such advantages.
Forex market is never down Trading opportunities exist in the currency market regardless of whether a trader has bought or sold, or which way the market is moving. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. You always have equal access to trade in a rising or falling market.
This is unlike the stock market where falling prices (bear market) spells bad news for stock traders.
No restrictions on short selling Unlike the stock market, in forex there are no restrictions on short selling. Short selling is the placing of sell orders when you think the market will trend down. This restriction doesn't apply to forex because you simultaneously buy one currency while selling another.
