Below I have listed some reasons why forex trading is increasingly becoming an investment opportunity of choice for many investors and day trader over equities trading.

The first is the 24-hour availability. When trading forex it doesn’t matter whether its 3am or 8pm, there will always be a trader somewhere looking to sell or a buy. This gives you the ability to react to any financial news, as they occur. Forex traders can enter and exit their trades at any time-without having to wait until the market opens to act on new information. Equity trading is restricted to the operating hours of the various equity exchanges.

The second is its unparalleled liquidity which leads to greater efficiency. Forex boasts a daily trading volume that is 50 times larger than the New York Stock Exchange. This significant liquidity of this market helps ensure price stability, because there are always broker and dealers willing to buy or sell currencies. Equities are more vulnerable to liquidity risks due to limited trading volumes and market accessibility. In the less liquid equity markets, large price movements may occur when individual transactions take place.

Third is leverage offered by most online forex brokers is substantially larger than any offer you’ll find in the equities market. The margin online forex brokers offer is far greater than the common 2:1 margin available in equity trading. Most forex brokers offer up to 100:1 leverage, traders can post $100 margin for a $10,000 position, or 1%. While certainly not for everyone, the substantial leverage available from online currency trading firms is potential money making tool.

Fourth is the Lower Transaction Costs. Forex trading is much more cost efficient in terms of commissions and transaction fees. Easy Forex for example, charges no commissions or fees, while still offering forex traders full access to all relevant market information and trading tools. This is in stark contrast to the equity market, where commissions for stock trades range from $8 to $70 and higher in addition to the quoted spread.

Fifth In the forex market, there is a potential to profit (with a risk of loss) in both bull and bear markets. Currency trading always involves buying one currency and selling another, there is no structural bias to the market. If you are long a currency, you are always short another currency. Because of this, there is potential for profit when currencies trend upwards and when they trend downwards. This is different from the equities market, where most traders go long instead of short stocks, and so much of the equity investment community tends to suffer in a bear market.

The ability to sell foreign currencies without any limitations is another distinct advantage over equity trading. In the US equity trading markets, it is much more difficult to establish a short position due to the Zero Up-tick rule, which prevents investors from shorting a stock unless the immediately preceding trade was equal to or lower than the price of the short sale.
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