The 4 Reasons Why Currency Trading is Better than Stock Trading

By: Justin Stewart

There are a lot of aspects to consider if you're planning on investing in any one of the investment markets. There are commodities, currencies, futures, and stocks and each one has there upsides and downsides. Some individuals who prefer the "safer" investing practices (e.g. 401k, CD's, mutual funds, etc.) would say that investing in one of the above markets isn't really investing --- it's gambling and involves a much greater risk factor than the traditional, slow-growth ways of investing. But, like it or not, the markets are here to stay, and as long as they are open, individuals will take their chances at earning bigger, faster profits.

Commodities and futures are the ultimate risk because of the timeframe involved (normally a 3-month contract on these). The risk factors involved with currencies and stocks are there as well, but where the commodities and futures markets involve long-term risk, currencies and stocks is more of an immediate risk. So now you just need to decide between currencies or stocks. To help with that decision-making process, here are four reasons why currency trading is better than stocks.

Reason #1: The Bear and the Bull don't play in this arena - though the stock market is always labeled as either bearish or bullish, the same cannot be said about the forex market. The fact that the bears and the bulls are in force matters not since currency can equate to growth in those types of markets. Regardless of which direction the forex market is heading in, there is usually profit potential within the forex market. Additionally, there are no short-selling restrictions and you can control hundreds of thousands of dollars with currencies.

Reason #2: How about 50 times more leverage - no exaggeration here. Currency trading with the forex market will afford you 50 times the leverage that you will get when you're trading commodities, futures, or stocks.

Reason #3: An opportunity to enjoy much more diversity - another one of the advantage has a significant appeal to a lot of investors --- forex offers the trader a broad diversity. Trade balances can be detrimental to the currency market. If a country's imports exceed their exports, then they will have a negative trade balance which will not be favorable to the currency's value. The wise investor will diversify their investment among a variety of currencies to offset these kinds of factors.

Reason #4: Investing around the clock is a possibility - open for business 24 hours a day (except weekends of course). The Asian market starts the day and when they are getting ready to close, the British market opens, and finally (about 6 hours later) the North American market is open for business. When the North American market is calling it a day, the Asian market is about to open, and the cycle begins again. The stock market can't hold a candle to this, again making currency trading a better choice. The bottom line is that Forex is not only the largest market to be open 24 hours a day, it is also the most liquid.

Trading
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 

» More on Trading