Phone screen displaying market graphs and financial charts.

6 reasons to use trade forex instead of stocks 

Are you interested in trading stocks but aren’t sure if it’s the right move for you? If so, you may want to consider forex trading instead. Forex trading has many advantages over stock trading, and it has always been a popular choice amongst traders. In this article, we’ll discuss why forex trading is a better option than stock trading. 

There are many different choices out there when it comes to investment options. So what makes forex trading a better choice than stock trading? We’ll outline six reasons below. 

You can trade forex 24 hours a day, five days a week 

With forex trading, you can take advantage of global currency movements 24 hours a day, day, five days a week. The forex market is open 24 hours a day from Sunday evening to Friday night, and this means that you can trade forex whenever it’s convenient for you. In contrast with stock trading, this is a significant advantage, as the stock market is only open for 6-8 hours a day. 

There is more liquidity in the forex market 

The forex market is the most liquid globally, with a daily trading volume of $5 trillion. It means that there are always buyers and sellers in the market, so you can trade 24 hours a day. In contrast, the stock market is much less liquid, with a daily trading volume of just $200 billion, and it can make it challenging to buy and sell stocks when you want to. 

Forex trading is commission-free 

When you trade forex, there are no commissions or fees, and you only need to pay the spread, which is the difference between the bid and ask price. In contrast, you have to pay both a commission and the spread when you trade stocks. It can add up to a significant amount of money, especially if you’re a high-frequency trader. 

There is more opportunity for profit in forex trading 

The forex market is much larger than the stock market, so there is more opportunity for profit. The foreign exchange market is where one currency is traded for another. It is the largest market globally, with a daily trading volume of $5 trillion. Compared to the stock market, which has a daily trading volume of just $200 billion. 

You can trade multiple currency pairs 

In forex trading, you can trade multiple currency pairs, and this means you’re not limited to just trading US dollars, for example. You can also trade euros, pounds, yen and other currencies, which gives you a lot more flexibility and opportunities to make profits. 

You can trade anonymously 

When you trade forex, you can do so anonymously. You’re not buying or selling shares of a company, and you’re only exchanging one currency for another. So there’s no need to disclose your identity. 

How to start forex trading 

If you’re interested in forex trading, a demo account is one of the best ways to start. A demo account lets you trade in real-time without risking your own money, and it is a great way to learn about forex trading and test your trading strategies. Once you’re ready to start trading for real, you can open a live account. 

You can do this with a broker or through a bank. Once you have an account, you’ll need to deposit money, which is called your margin (the amount of money you have available to trade with). 

The next step is to choose a currency pair. The most common currency pairs are EUR/USD, GBP/USD and USD/JPY. Once you’ve chosen a currency pair, you’ll need to decide how much money you want to trade, and this is called your position size. 

After that, you’ll need to place a buy or sell order. A buy order is to buy a currency pair at the current market price, and a sell order is an order to sell a currency pair at the current market price. 

Once your trade is executed, you’ll either make a profit or a loss. If the currency pair’s price goes up, you’ll make a profit, and if it goes down, you’ll make a loss. It’s as simple as that.