The Foreign Exchange Market is better known as Forex trading. The question often arises of whether there is an advantage of Forex trading over stock and commodity markets. There are indeed advantages of investment in financial trading on the Forex market over the stock and commodity markets, and I will address those advantages in this commentary.
The Forex market offers so many advantages over stock and commodity markets that it is not hard to understand its popularity. The Forex market has centers located around the world so financial trading can be completed 24 hours a day. The Forex market is a truly worldwide market, and so when the doors close in one trading center another financial trading center is opening.
The second advantage of Forex trading involves the mind-set of the investors. While the Forex market indeed fluctuates with trends and cycles; it does not have the Bull and Bear market mentality of the stock and commodity markets.
The third advantage of Forex trading is that the Forex market involves financial trading of money. If the value of one currency falls on hard times, it gives potential for a profit in another currency. The Forex market is not negatively affected by rising interest rates. When a nation raises its interest rates the currency is generally strengthened, but raising interest rates has a tendency to depress the stock market.
The fourth advantage of Forex trading relates to the number of possible trades as related to the stock and commodity markets. The NYSE and NASDAQ markets have a combined total of about 8000 different stocks. It is very time consuming to stay on top of even a small portion of them. On the other hand, the Forex market has only four major currencies and just about 34 secondary currencies to consider.
The fifth advantage of Forex trading is associated with brokerage firms, because you do not have to pay commission fees when you participate in financial trading. Additionally, Forex market analysts tend to actually examine the currency market rather than dictate or manage the rise and fall of it, as the case often is in the and commodity market.
When the Forex market and the stock and commodity market are put toe-to-toe, the Forex market appears to be a better investment choice.
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