Forex Vs Equities

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Traders that have in the past engaged in equity trading realize that trading in the forex market has major differences then trading in the equity trading market as the forex market is a non stop market that trades 24 hours a day 5 days a week therefore offering traders opportunities to both trade at odd hours and additionally capitalize on facts or breaking news that make it to the headlines all around the clock.

When trading forex regardless if you are in Tokyo, Chicago, Kuala Lumpur, Athens or New York when you open your trading platform there will always be buyers and sellers as the forex market literally does not sleep. This flexibility offers opportunities for traders to both practice forex as a part time practice and more over it allows them to conduct other business practices during regular business hours which do not affect their trading practice.

Additionally the flexibility of forex does not require a trader to be in one physical location as the only tool he needs to trade is a computer or a computer based telephone that will allow him to have access to the internet. In the equity market it is important to understand that trading after hours might in some cases be allowed but it will have major limitations as equity traders have access to matching systems often known as ECN’s which in reality are an internal network allowing traders to interact with one another and trade; it is only fair to say that these kind of networks are unable to offer tight spreads during after hours trading which means that most trades are not executed at fair market prices meaning in reality that no guarantees can be presented in regards to if every trade can be executed.

Thinking back for a second you will realize that any sort of an investment market lacking liquidity and substantially a lack of sellers and buyers at any given time is doomed to be escaped by traders which can not be accommodated and will seek an investment market that can match their needs and match their requirements in offering liquidity.

As the forex market operates with a worldwide massive network of banks, corporations, hedge funds and retail traders just like traders here at trading-point.com it is only reasonable that it is classified as the worlds most liquid and emerging marketplace which does not sleep and does not have working hours.

In difference to equity trading that have a very rough time selling their assets at times when the market might be moving against them the forex market has one main basic difference not only from the equity market but from all markets available worldwide and that is that there is always a buyer and there is always a seller available all around the clock 5 days a week. The practice of trading currencies has one main advantage which enables the high liquidity present in this particular market.

The market’s constant and emerging volatility provides the constant potential for gains and of course, the constant potential for loss as well. Forex trading can be very risky when abused similar to any form of trading, but execution in or out of trades should not be a problem when trading through reasonable boundaries.

High Leverage in Contrast to Equity Trading

When talking about forex the most important key factor to discuss is that of leverage as the particular term brings is what brings both risk and gain in what we call the foreign exchange market which is something not present in equity trading. When we talk about leverage we describe the possibility to control positions larger than that of the face value of the capital associated with the assistance of leverage which is offered from trading-point.com.

We offer leverage as high as 1:500 which traders have the benefit of taking advantage of regardless of what kind of account type they maintain therefore allowing them to gain a competitive advantage over equity traders. From one point of view leverage is what brings risk to the forex market but it can have high advantages in contrast to equities trading when it is not abused and properly used. In order to best understand what the advantages of leverage is you should first of all realize that the currency market is in a constant moving phase with relatively very small market movements.

To make it easy to comprehend you should understand that the average movement across currencies is around 1% across all major pairs available for trading. If you might compare that to the equity trading market you will soon realize that as the daily movements of the equity market are around 10% you will realize why large volumes are needed to accumulate a respected profit from a price movement. Made even easier as the changes of the currency market as small tiny you need a large volume of movements in order for the multiplier to present a relatively respected figure to the table.

With out the presence of leverage most retail traders cannot really trade in the forex market as with a small capital they can’t really experience any sort of respected gains which will allow them to sustain a profit and at the same time position them in risk as many rookies make a common mistake of opening to many positions simultaneously meaning that an unexpected marker movement might mean a large drawback.

We strictly advise any trader new to the Forex market to trade only a very small percentage of their account at any one time in order to be able to control both gains and losses and have the time digest practices that might have lead to a gain or a loss as forex is very much different to equity trading.