Forex Trading – How It Compares With the Stock Market

There are many reasons why Forex Trading appeals to more people than the stock market. One of the main reasons is the fact that Forex offers a much greater return.

With foreign currency exchange fluctuations happening daily from as little as just one or two percent any investor who has planned his entrance and exit strategy properly and gets his timing right, can receive significant rewards.

Many people also like the fact that more leverage is available with a foreign exchange. For example: you could leverage the purchase of $100,000 with $10,000 through margins that could give a great return at only 1% and with less risk.

With Forex trading the market is open 24 hours a day compared to conventional business hours held by the stock market. Forex trading is also done without having to pay extortionate amounts of money in commission. This can of course mean great savings.

Because Forex trading is open 24/7 and because of its massive size, any trader is able to work 24 hours a day moving around from the difference markets, i.e. Asian, European and American. Add to this the Forex leverage opportunities available then the chance of huge profits are great.

There is a misconception about the size of the Forex market. Many people don’t realise that it is so huge that no single investor has a chance of cornering the market.

Unfortunately many people fail to understand Forex to its fullest and this is only through a lack of education. Because of this lack of education, traders who have previously experienced the stock market, seem to believe that Forex is risky and has low profit margins, some would say extremely small. However it does take more than just watching CNN.

As a Forex trader, people must educate themselves through newsletters etc. If people were to join a Forex trading site and make use of the on-line training programs available, of which the majority are free, then they would start to learn about the advantages of Forex against trading on the stock market.

As far as the stock market goes, it does have its advantages in that a person can invest in the stock market without any prior knowledge and possibly do very well. There are some stocks that are unlikely to devalue like blue chip stocks. For long term savings stocks can be fine, however, for short term gains you need to be definitely looking at Forex.

Forex is maybe considered by some people to be risky, mainly pension funds who rarely invest in Forex. However, for the smart ones that have taken the opportunity of educating themselves, they will find, without doubt, that Forex is the easy way to go.

Take the billionaire George Soros as a prime example. He shorted the British pound and made $2 billion in profit at one point. He also makes over 60% returns on the Quantum fund which he owns and has over $4 billion under management. There have been times of course, when Soros has lost money, however he simply says “I make a lot of money when I’m right and loose as little money as possible when I’m wrong”.

Soros’s philosophy is to scrutinize a country’s stock market to see if current trends are right or wrong. If he believes that a trend is overshot then he simply goes the opposite way and makes a killing.

Soros is a prime example of how good money can be made in Forex if investors are willing to study, learn, invest and of course take a risk. Whilst however it is not for the timid, if you’re a daring Entrepreneur then it’s the perfect place for you to try your hand as Forex offers the chances of a good return.