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 FOREX
vs. STOCKS
Remember that both stocks and forex trading involve risk. Forex
trading is not conducted on a regulated exchange and as a result,
there are additional risks associated with forex trading.
Historically, the majority of the general public has viewed the
securities markets as an investment vehicle. In the last ten years
securities have taken on a more speculative nature. This was perhaps
due to the downfall of the overall stock market as many security
issues experienced extreme volatility because of the irrational
exuberance displayed in the marketplace. The implied return
associated with an investment was no longer true. (If indeed it ever
was.) Many traders engaged in the daytrader rush of the late 90's
only to realize that, from a leverage standpoint, it took quite a
bit of capital to day trade, and the return while potentially higher
than long-term investing was not exponential. After the onset of the
daytrader rush, many traders moved into the futures stock index
markets where they found they could leverage their capital greater
and not have their capital tied up when it could be earning interest
or making money somewhere else. Like the futures markets, spot
currency trading is an excellent vehicle for pattern daytraders who
desire to leverage their current capital to trade. Spot currency or
forex trading provides more options, greater volatility and stronger
trends than currently available in stock futures indexes. Former
securities daytraders have an excellent home in spot foreign
exchange (forex).
No Middlemen
Centralized exchanges provide many advantages to the trader.
However, one of the problems with any centralized exchange is the
involvement of middlemen. Any party located in between the trader
and the buyer or seller of the security or instrument traded will
cost them money. The cost can be either in time or in fees. Spot
currency trading does away with the middlemen and allows clients to
interact directly with the market-maker responsible for the pricing
on a particular currency pair. Forex traders get quicker access and
cheaper costs.
Buy/Sell programs do not control the market
How many times have you heard that "fund A" was selling "X" or
buying "Z"? Rumor had it that the funds were taking profits because
of the end of the financial year or because today is "triple
witching day", all as an explanation of why this stock is up or the
market in general is down or positive on the session. No matter what
your broker says the stock market is very susceptible to large fund
buying and selling, and it is not uncommon for a fund to run a
particular issue for a few days. In spot currency trading, the
liquidity of the forex trading market makes the likelihood of any
one fund or bank to control a particular currency very slim. Banks,
hedge funds, FCM's, governments, retail currency conversion houses
and large net-worth individuals are just some of the participants in
the spot currency markets where the liquidity is unprecedented.
Analysts and brokerage firms are less likely to influence the
market
Have you watched TV lately? Heard about a certain Telecomm stock
and an analyst of a prestigious brokerage firm accused of keeping
its recommendations, such as "buy" when the stock was rapidly
declining? It is the nature of these relationships. No matter what
the government does to step in and discourage this type of activity,
we have not heard the last of it. IPO's are big business for both
the companies going public and the brokerage houses. Relationships
are mutually beneficial and analysts work for the brokerage houses
that need the companies as clients. That catch-22 will never
disappear. Foreign exchange, as the prime market, generates billions
in revenue for the world's banks and is a necessity of the global
markets. Analysts in foreign exchange don't drive the deal flow,
they just analyze the forex trading market.
8000 stocks vs 4 major currency pairs
There are approximately 4,500 stocks listed on the New York Stock
exchange. Another 3,500 are listed on the NASDAQ. Which one will you
trade? Got the software? Got the time? In spot currency trading, you
have 4 major markets, 24 hours a day 6 days a week. You have
approximately 34 second-tier currencies to look at in your spare
time (if you are so inclined). Concentrate on the majors, find your
trade. Spend your afternoon on the golf course or with your kids
(instead of with your eye doctor trying to diagnose why you are
seeing double).
Commission-free
Simply put: no commissions, no clearing fees, no exchange fees,
no government fees, and no brokerage fees. (GFT is compensated by
revenues from its activities as a currency dealer, including
proceeds from buying, selling, converting as well as holding
currencies and interest on deposited funds and rollover fees.)
Same price for broker assisted trades
No premium for calling in orders, whether or not you trade forex
via the phone, use market orders, stop orders, limit orders or even
contingent orders. In spot currency trading you do not have to worry
about extra charges. Ever wonder why a securities brokerage house
charges you more if they have to guarantee you a price than if you
give them a market order with no price qualifier? Well you don't
have to worry about it if you trade the currency markets.
Trade off of your profits
Ever been up on a stock and wished you could leverage that profit
and get in a little more of the issue? In spot currency trading you
can. Use your open profits to add to your positions. As you gain
experience, experiment with pyramid trading strategies. The options
are endless because the market is cutting edge.
(global forex)
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Forex
Introduction