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Comparing FOREX vs Stocks

Trading is just like anything else: everybody has their preference. However, there are some clear advantages when it comes to trading forex as opposed to stocks. Here is an obvious one: there are thousands of companies listed on the New York Stock Exchange. Believe it or not, there’s a good chance that you may not have even heard of some of them, much less have the time to examine their financials, team, market share, or other metrics.

Let’s compare that to spot currency trading, where there are four main currency pairs that are traded the most, even if there are dozens of currency pairs. Which is easier – keeping track of thousands of companies or some currency pairs? That’s just one example.

The 24-hour advantage!

In modern times, our schedules have gotten crazier than ever. We have our personal lives, our professional lives – and between the two, if we want to grab a beer with a friend or even watch some Netflix, it’s hard enough as it is! However, forex trading allows a CONSTANT opportunity. If you decide to wake up earlier than normal, read about some news, and decide that you have an opportunity – you can do that ANY TIME with forex. With stocks, you have to wait for the market to open, and you probably have to wait around longer to check the price action before deciding on what trade to execute. The bottom line is that you can actually CUSTOMIZE your schedule with forex – something you cannot do with stocks, at all.

Commissions are terrible, and they eat away at your money.

It doesn’t matter whether you are successful or not, if you are trading, they are slowly taking away your capital. Most forex traders charge little to no commission, and many are compensated through the bid/ask spread, which means you get to protect your capital!

Your orders are executed instantly.

This means that you can trade according to real-time market prices, and don’t have to wait around or worry about orders getting filled. Of course, there are VERY RARE occasions where this isn’t the case.

Large institutions don’t control the market.

Hedge funds can truly manipulate and take hold of a stock, and make it much harder for retail traders to profit. They might even help to bring a stock’s price down to encourage retail to sell, only to take it higher, but after many traders have sold out of desperation. The forex market is TOO LARGE for institutions to manipulate the market like this! This is important for those trying to profit.

The forex market being so big, analysts have less of an effect.

The media and analysts have all sorts of influence in the stock market, since there is less money being traded and less liquidity. There are billionaires that can affect a stock price with several “tweets” these days, and that can be very frustrating to someone who is simply trying to make a living by trading. Even with the SEC, it continues to happen, and can be very discouraging. Ultimately, there is a relationship there – analysts work for brokerage houses, and these companies are big business for these brokerage houses. The odds can certainly seem stacked against you when you trade stocks, in a way that doesn’t happen in forex.

Forex trading is decentralized, which means no middlemen!

This is essential, and can make the trader feel better about their choices. There are parties in between the buyer and seller when it comes to stocks, and that can cost even more fees. The forex market doesn’t deal with these kinds of inconveniences, and on a very ethical level, it can help you feel better about your trading choices.

These are some very obvious reasons why forex trading blows stock trading out of the water.