A newbie trader or investor will probably think about the stock market first when first trying to play in the LBLV Online Broker financial market. However, there are many reasons why the forex market is a better choice. Here are some of those reasons.
Trading Volume and Liquidity
There’s no doubt about it: the forex market is the most liquid financial market in the world. Just take a look at surveys, and you will find that this market clocks in an average of trillions of dollars per day.
So far, this trading volume tops the combined trading volume of all stock markets. On top of that, liquidity sits at a high level in the forex market during any given trading day. That’s because as any forex trading exchange approaches an end of a session, another exchange is just getting started.
You cannot do short selling in the stock market, at least not easily, since the core principle of investing in stocks is to see the stocks of the company go high. There are also many instances where speculators receive criticisms when they go short on a stock.
Meanwhile, in the LBLV Broker Account Types forex market, you are dealing with two currencies at a time. Basically, you’re betting that one currency will go up while the other goes down. When you take a short position on one currency, you are automatically taking a long position on the other.
Forex is Easier to Understand and Monitor
With forex, you are only required to analyze and monitor a handful of pairs to trade. Unlike in the stock market, where sometimes you have to track the performance of hundreds of companies, you only have to get news about several major pairs. There is a lot less research work to do in the forex market.
You get the news in a much more straightforward way. In one pair, you only have to seek economic and political information from two different countries.
It’s also worth mentioning that traders in the stock market typically receive news before or after the market opens. That means the trader sometimes has to wait until the market open to execute a plan.
Costs and Fees
The fees and transaction costs in the stock market are lower than those found in the stock market. Trading in the forex market lets you avoid any hidden fees, which can chip away from your profit and trading capital.
In the stock market, you will have to pay commission fees for brokers when you are placing or exiting trades. Meanwhile, forex brokers earn their keep from the difference between the bid and ask prices.
You can use high levels of leverage in the forex market—up to 900 times. This is mainly attributed to the high level of liquidity within the market.
For instance, if you have been a futures trader, you are probably used to margin requirements equal to five to eight percent of the value of the contract. When you switch to the forex market, you will notice right off the bat that it offers greater leverage than the stock market.