Since advances in technology, anybody with an internet connection can take part in trading foreign exchange on the Forex market. The following are some reasons why a day trader trading in the stock market would benefit by switching into Forex day trading.
The forex market is open 24 hours a day, 5 days a week unlike the stock market and commodity markets who have set trading hours of only eight hours a day. The longer hours gives a trader more chances to trade in the market. In addition to that, traders can trade any time which is convenient to them through an online account.
The forex market has lower trading costs as well. It has no commissions paid to brokers, low transaction fees and no exchange fees. In comparison, the stock market and the commodities markets incur fees and commissions which have to be paid to the traders, dealers and brokers. This leaves lesser profits for the day trader at the end of the day.
Day traders must always be aware of their capital in hand and how liquid they are so they can act instantly when they see opportunities. Non-liquid buyers will always have cash flow problems and will be too late to act on opportunities. Forex investors or traders looking to act instantly on trades can do so due to the high-liquidity of the Forex market. You are after all playing currencies and nothing is as liquid as currency. It is easy for investors and trader to enter and exit trades without any sort of delay. Timing is very important for day traders as most securities are volatile and a small change in price can result in big gains or losses. This is one of the most attractive features of Forex day trading.
A day trader that is participating in the forex market has the ability to earn income through referrals. The trader can have arrangements created with Forex brokers so that they can earn referral commissions by introducing other people to their Forex broker. Even though this is extra activity, it still gives day traders an extra source of income by getting them to refer their friends to join.
The stock market is open to outside manipulation by companies or stock brokers. However, manipulating the forex market is near impossible to do so. Even if the central back were to intervene, it would be short-lived.
Another advantage of switching to the forex market is that there is more leverage. For example, $100,000 US dollars can be bought for around $10,000 leverage when bought through margins. This allows for higher returns, but with less risk.
The features mentioned above make participating in the forex market an appealing source for potential traders choosing to trade as a full time job. The global foreign exchange market trades in excess of a trillion dollars a day. Due to the massive market size, it shows there is considerable money to be made through the forex market.
Arkaitz Arteaga - MarketStock.net
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