Advantages of the Forex Market
Dealing with currencies has a lot of advantages compared with dealing in the stock market. Some of these differences are 1st, the foreign exchange is a twenty-four hour market compared with the stock exchange. Forex is open the whole day compared with the stock exchange that will shut down by the end of the day.
This is a good advantage for small scale investors who are dealing in their free time. Rather than re-arrange their schedule for dealing opportunities. You can schedule your dealing when you have a free time. You can trade even at 1:00 a.m. because there are banks all over the world that are still open at that time in a different time zone.
2nd, cheaper transaction expenses. Forex dealers are not hampered by the usual commission fees and there are no additional fees. The dealer's fee is put into the deal in form of a spread or bid. A spread is the difference in what would you bought money for and what you would sell. The spread in forex dealing is expressed in "pips".
3rd, the leverage or margin. The skill to deal on a margin gives forex dealers important leverage in their dealing and gives the chance to make good money even with a small investment. Like with a forex dealer that permits for a margin of one hundred is to one, you can buy $100,000 dollars in currency with only a deposit of $1,000 dollars.
A leverage can go both ways and can lead to a bad loss if you will not watch out. 4th, big liquidity and fast trade execution. When you are dealing with currencies, you are literally dealing with cash. There is no business investment more diverse and liquid than money. You will not wait for a long time if you want to trade.
5th, not easily manipulated. The Forex market is very large that no person, cash, financial organization or government division can manipulate. This is a complete opposite of the stock market where a view of a certain analyst can severely affect the market.
6th, minimum sample study. There are a lot of stocks that you can deal with. Big, small and international organizations and IPO's are a part of this growing market. In forex dealing, there are only seven "majors" that you can deal with. There are some good dealers who do not trade with the majors. They only pick three to four currencies to deal in. 7th, no bear environment. Since you can choose to deal short or long, you can make some profit even if the price changes.