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A number of traders might have difficulty engaging in Foreign currency trading simply because they still believe that stock trading is way better. This is usually because they do not understand what Forex trading is. With stock trading you’re trading little pieces of the company that can maximize or decrease in value based upon how much money the company generates. Each stock can be traded for a profit in the short-term and the long-run. The majority of people who jump into stocks want to get in it for more of a long term financial investment.


With forex trading the entire name of the game is short-term. People are not worried about holding on to a thing for a long time. Several forex trades are usually done within a 24 hour timeframe plus the results can be better then with stocks. Below I’m going to go over some of the many benefits of currency trading trading as opposed to the stock market so that you can determine for yourself if this marketplace is best for you.


Broker fees and Foreign Exchange Trading


With stocks a person have to pay a commission rate to your stock broker for the transactions you make. Based on whom your stock broker is these rates can be substantial and increase pretty quickly. So with a big number of positions your commission rates can get out of control pretty fast. Forex trading gives an advantage in this area seeing as how fx trading is commission free.


With Foreign exchange trading your broker does not take a fee for your trades. They set a thing called a spread on your funds. This is simply the gap between the asking price of whatever foreign currency you happen to be buying and the selling price. Therefore you will not have to pile up substantial fees.


Differences in time


Once you’re stock trading you are limited by the time you can spend on them. The marketplace ends in the afternoon. If you are trading the foreign currency trading market the day last round the clock, the trading begins way across the other side of the world in marketplaces like Australia early in the week and isn’t going to end until the end of the working week in places like New York. And so somebody who may not have much time on their hands may as well get in on this marketplace whether or not they are stuck in a regular job.


Limited size of the markets


The biggest distinction in Forex trading versus stock market trading is the sheer volume of the market itself. If you were to combined all the American stock markets they would only equal approximately about 100 billion dollars of day-to-day activity. With forex trading the market handles anywhere from between 1.5 trillion dollars to 3 trillion dollars daily. The marketplace is worldwide and never restricted to any one place in the world. This makes it possible for for the currency to be a lot more liquid which means that there is always someone who is willing to buy and someone ready to sell regardless of what currency they need.


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