Why is the Forex Market better than stocks? Why is a dollar better than a nickel? Because it’s worth a lot more. That is one of the most basic and obvious answers to this question. The Forex Market is where the largest volume in trading is going on, with an incredible amount of nearly $2 billion worth of trading in a 24 hour day. There is a fortune that can be made in trading Forex because the Forex market is constantly trading.

The forex and stock market are two of the largest trading markets, and traders often wonder which one is the better option. For all the attention surrounding the stock market, trading forex is much better. In all cases, Forex  trading as the best way to raise your income or even get a new, simpler full-time job. That’s just one of the many advantages of the forex market over the stock markets. Here are a few more:

Higher Trading Volume and Liquidity

In comparing stock and forex trading, there are several talking points to consider. Although we see the stock market as the be-all, end-all of trading markets, in truth no stock market can hold a candle to the Forex market in sheer size. While the stock market trades about $200 billion per day, a staggering amount wherever you put it, the Forex market goes even higher, averaging $5 trillion per day. That’s more than several tens the magnitude of the stock market.

While sheer size might not tell us much at first, it matters a lot – particularly once we also consider that the Forex market is highly liquid. A large trading market with high liquidity means it’s much easier for anyone to enter or leave the market, since the expectation is that whenever you want to trade there will be somebody willing to trade with you.

24-Hour Market 

The stock market is limited to an exchange’s opening hours. For example, in the U.S., most stock exchanges open at 9:30 am EST and close at 4:00 pm EST. The forex market is a seamless 24-hour market. Most brokers are open from Sunday at 5:00 pm EST until Friday at 5:00 pm EST,  With the ability to trade during the U.S., Asian, and European market hours,

you can customize your own trading schedule and it has no single central location; therefore, participants are spread across the globe; and there is always a part of the market that is in business hours.

Lower spreads on forex

Spreads, the difference between the bid and ask price are on average smaller compared to stocks. Although some large cap stocks such as Apple have tight spreads, it is not the case with many other stocks that you can trade.

In the forex markets, the major currencies involving the EUR, USD, GBP, JPY, CHF and CAD come with tight spreads due to the volumes that these currency pairs enjoy. Thus in the longer term, the spreads are a lot cheaper compared to trading stocks.

Minimal Market Manipulation

How many times have you heard that “Fund A” was selling “X” or buying “Z”? The stock market is very susceptible to large fund buying and selling. With currency trading, the massive size of the forex market makes the likelihood of anyone fund or bank controlling a particular currency very small.

The FX market is sufficiently liquid that significant manipulation by any single entity is all but impossible during active trading hours for the major currencies. Banks, hedge funds, governments, retail currency conversion houses, and large net worth individuals are just some of the participants in the spot currency markets where the liquidity is unprecedented.

No restriction on short selling

When a stock market declines, you can make money by shorting, but this imposes additional risks, one of which is that you may have unlimited losses. In reality, that’s unlikely to happen. At some point, your broker will end the short position. Nevertheless, most financial advisors caution against shorting for all, and many of the most experienced investors execute parallel stop-loss and limit orders to contain this risk.

Unlike the equity market, there is no restriction on short selling in the currency market. Trading opportunities exist in the currency market regardless of whether a trader is going for long OR short, or whichever way the market is moving. Since currency trading always involves buying one currency and selling another, there is no directional bias to the market. So you always have equal access to trade in a rising or falling market. In forex you can go short on a currency pair as easily as you can go long. The two positions present similar risks.

Conclusion

If you want to play the market, then forex will be the ideal place for you. This is partly attributable to market size – and also, because of how leverage works in forex vs the stock market. Each market might be better suited for one person or the other, but for a retail investor looking at short term gains, forex trading trumps the stocks.