Forex vs. Stocks |
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Advantage |
Forex Market |
Stock
Market | |
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Trade Around the Clock |
Yes |
Limited |
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Pay No Commissions* |
Yes |
Limited |
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Unlimited Short-selling |
Yes |
No |
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Market Information Easily Available |
Yes |
Yes | |
Trade Around the Clock
The forex market is a near-seamless 24-hour market. Subject to available
liquidity, FXCM offers trading from Sunday, starting after 5:15 PM EST,
until Friday, 4PM, EST (Client Service is available 24/7).
With the ability to trade around the clock,
currency traders have the advantage of customizing their own
trading schedule; they can usually get in or out of the market
at any time without waiting for an opening bell or
encountering a market gap. While trading stocks after usual
market hours is possible, very often that possibility is
negated by a lack of order flow or a drastic widening of the
bid-ask spread.
Pay No Commissions*
In the forex market costs are confined to the bid-ask spread.
Some brokerage firms charge no commission or additional transaction
fees, and customers trade on spreads provided to the brokerage firm
by some of the world’s largest banks via the FX Trading Station.
* In the
stock market, “no-fee” programs are frequently offered only
with provisos mandating minimum account balances or minimum
trades per month.
No Uptick Rule
Unlike the equity market, there is no restriction on short
selling in the forex currency market, no matter which way the
market is moving. Since currency trading involves buying one
currency and selling another, a trader has the same ability to
trade in a rising market as in a falling one.
Forex Market Information Easily Accessible
Information about stocks is abundant, but so are the stocks.
Finding a trade opportunity in the equities markets may mean
sifting through data on thousands of stocks, while the forex
trader has only six major currencies to research.
Additionally, the vital information that moves equity markets,
such as revenues and profits, is proprietary and private, and
sometimes subject to fraud, deception and insider trading. In
contrast, virtually all of the news that bears on the forex
market is in publicly disseminated reports from governments or
research institutions, and released to everybody at the same
time.
The knowledge you've gained in analyzing stocks is easily
transferable to the forex market. Many of the economic
indicators familiar to equity traders, such as payroll data
and interest rates, affect the currency markets. And many
technical traders have found the forex market to be
particularly attractive, since currencies respond well to many
of the common technical indicators, such as MACD, RSI, and
Candlestick charting.
*Some brokerages are
compensated for their services through the bid ask
spread. |
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