It is a fact that you can start to trade Forex with as little as $300 by opening a Forex Trading account. Furthermore, the currency (or forex) market is opened 24 hours a day, so a trader can day trade or short-term trade with an active financial controls, all the time. All this is relatively new. In the not too distant past, only banks and wealthy individuals and institutions could trade currencies, but now, thanks to the internet, every small investor could participate in currency trading (or forex trading). Some of the major advantages of currency trading over stock trading are:
Forex Trading - 24 hours a day - Currency trading goes on from Sunday evening to Friday afternoon, so for 5 days of the week you could trade currencies all day long! The currency market does not close every day like the stock market. This basically allows the Forex trader to choose the hours that he is going to day trade (morning, afternoon, night, part time or full time...anytime!).
Greater Leverage - In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make extraordinary profits and at the same time keep risk capital to a minimum. For example, Forex brokers offer 100 to 1 leverage, which means that a $100 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $1000 dollars, one could trade with $100,000 dollars and so on. But leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.
Easier to Follow - There are only a handful of major currencies to trade. This is a lot easier to do than with stocks. There are tens of thousands of stocks out there. How do you choose which stock you are going to trade? It is much easier to follow a few currencies.
Fast and Easy Online Execution - Real-time streaming prices, which means you get precise, firm prices even during volatile and fast-moving markets. Orders can all be executed from your computer anywhere with internet access.
More Liquidity - When we are trading any market has to have enough volume to make it worth our while. Greater volume means that there are more people willing to buy and sell something at any given time. The currency market is more liquid than all the world stock markets put together. Currencies are always in action.
Great for Short - Term Traders - For those that like to hold stocks for a few days when trading, currency trading is perfect. Since the currency market is opened 24 hours a day for 5 days a week, a currency trader that wants to hold a currency position from one day to the other (or for a few days), can do it with a stop loss and limit orders in place.
Less Manipulation - The Forex market is so vast and has so many participants that no single entity, not even a central bank, can control the market price for an extended period of time. As the market has grown even central bank interventions have become increasingly ineffectual and short lived as a tool for controlling the value of a particular currency.
Risk Disclaimer- Currency trading involves substantial risk of loss, and thus is not suitable for all investors. You should carefully consider your financial situation before opening a trading account, and only risk capital should be used when trading in these markets. In addition, we recommend you consult your financial advisor to help you determine if currency trading is appropriate for you.
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