My purpose for writing this article is to show to you the benefits of trading on the currency market. However, there's one parable that I need to dispel before I'm going further. The parable is that there's a difference between trading and investing. To dispel that parable I quote from Al Thomas, President of Williamsburg Investment Company, who wrote If it is not going Up, do not buy It. He claimed Everybody who invests is a trader, only the period of time is different.
it's a lesson that I took seriously after taking a thrashing in the market in two thousand. So now, let's compare features of currency trading to those of stock and commodity trading. Liquidity - The currency market is the most liquid money market on the planet around 1.9 trillion bucks traded common-or-garden. The commodities market trades around 440 bn. bucks a day, and the US market trades around two hundred billion greenbacks a day. This makes sure better trade execution and stops market manipulation. It also guarantees simply executable trading. Trading Times The currency market is open twenty-four hours a day ( except weekends ) meaning that in the USA it opens at 3:00 pm Sun. ( EST ) and closes Fri. at five hundred ( EST ), permitting active traders to pick the times they need to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Including extended trading times US stocks can be traded from 8:30 am to 6:30 pm ( ET ) on weekdays. Leverage depending on your FOREX account size, your leverage could be 100:1, though there are Foreign exchange brokers that offer leverage of nearly 400:1 ( not that I would ever endorse that kind of leverage ).
Leverage in the stockmarket can be as high as 4:1, and in the commodities market, leverage varies with the commodity traded but it can be quite high. As the commodity markets are not as liquid as the currency market, its leverage is intrinsically riskier. Though I wasn't shut out of a commodity trade by the day limit, the fear was always in the back of my mind. Trading costs Exchange costs in the currency market is the difference between the buy and sell cost of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are exchange costs and brokerage costs.
Even if you use cut price brokers, those charges add up. Minimum investment You can open a currency trading account for as little as $300.00. It took $5,000 for me to open my futures trading account. Focus 85% of all trading transactions are made on seven major currencies. In America stock market alone there are forty thousand stocks. There are just over 2 hundred commodity markets, though a few are so illiquid that they are not traded except by hedgers.
As you can see, the less number of instruments permits us to study every one closer. Trade execution In the currency market, trade execution is sort of immediate. In both the equity and commodity markets, you count on a broker to execute your trades and their results are often inconsistent. Whilst all these features make trading the currency market extremely interesting, it does needs plenty of education, discipline, commitment and patience.