Investors always aim to maximize their money instead of letting it sit idle. For that, there are a number of options available for them to invest in, such as:
- Investment in Forex trading
- Investment in Stocks
- Investment in Futures
Each of these investment opportunities offers advantages and disadvantages to its investors and traders. Yet, only one kind of investment, which is an investment in Forex trading, stands out from the rest. There are a number of reasons for this. Some of which are outlined below:
Limited Risk in Comparison
Some investments, such as trading in futures, can often have unlimited risks involved. An example of this can be investing in Live Cattle when it seemed that cattle prices were on the rise, only to suffer a great loss with the breakout of the mad cow disease which sent the price spiraling down. If you had invested in it, you wouldn’t have been able to leave your position and risked losing all the equity in your account.
However, with Forex trading, this is not the case. Yes, you get to face a loss if your trading goes wrong. But, you can always set a stop limit by way of a stop order to the broker to make sure you exit trading if the price falls below that limit, limiting the loss that you sustain.
Market is Open All the Time
With futures and stock markets, there are closing hours for the market as well as opening timings. Once the market closes, you cannot trade even if some important news comes in that you believe might affect the market. On the other hand, a Forex trading market is open 24 hours a day for 5 days of the week. This is largely due to the global nature of the market where the day begins in New York and continues throughout the day through Asia, Europe, and Australia and back to America. So you can trade at any time of the day you want to.
Free Market
The foreign exchange market is as close an option to a free market as there is in the world. The huge size of the market that has an average turnover of around $1.5 trillion is 46 times larger than the futures market. The fact that there are a large number people trading Forex all across the globe makes governmental controls on the market limited. So much so that governments are even unable to control the price of their own currency sometimes.
Much like governments, the size of the market means that it is extremely difficult for one single entity or a group of entities to control the flow of the market.
Lower Margin, Greater Chance of Profit
All three of the investments mentioned above, offer the customer some form of leverage. A future trader, for example, gets 5% of the complete value of the holding. Similarly, stocks are about 50% of the value of the stocks. However, for a Forex trader, this is as low as 1%. This means that a trader can make use of $100,000 investment with a foreign exchange investment of only $1000.
If you want to invest in the Forex market, but think that you lack the acumen, you can make use of expert companies such as ETX Capital to learn Forex trading. Forex trading may have its disadvantages, but in comparison with the other two investment opportunities, it really is the best fit.
