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The Appeal of Forex Trading Versus the Stock Market

Nick Makaryk
Jun 17, 2008
The Forex trading has become more appealing than the stock market during recent years for many reasons. The chance of a much higher rate of return is the main reason. While currency on the Forex may only fluxuate only one or two percent on any given day, investors who can see where it is going, will properly plan an entrance and exit strategy. That is to say when to get in and how to get out. Another appealing fact is that there is more leverage in the Forex. For example, $100,000 US dollars can be bought with as little as $10,000 leverage when purchased through margins. Buying currency this way allows for the chance of higher returns, with less risk, even if the return is only one
percent.

Twenty-four hour access is also a very attractive trait of Forex. In contrast, the stock market is only open during business hours. Also, trading on Forex doesn't pay brokers on commission, this can add up to considerable savings.

Because Forex information is not widely available or publicized, many people don't understand it. Also, many people who work with the stock market may say that the small, almost tiny profit margins are not worth the risk. This comes from not doing research on Forex versus other types of trading. Forex requires self-education through newsletters and Internet sources because you cannot just turn on the TV or open a newspaper to get the information you are searching for.

Having twenty-four hour access to Forex is a big advantage, especially coupled with it being worldwide. Although not recommended, a Forex trader and go from Asian markets, to European markets, to American and work twenty-four hours, if so desired. Add that with opportunities that leverage can provide, and the profit potential is almost astronomical.

Stocks have their own advantages that a person with little knowledge can appreciate. If you invest in blue chip stocks, you know they are unlikely to loose value. Stocks are great for long term investing. But if you are looking for short term, large gains, the Forex is definitely the place to be.

Because the market is so big with Forex, there is no single investor that can have the market cornered. This has happened with some stocks as well as precious metals and other commodities. Where a company only puts out so many stocks for public trade, there is no way you can own all the worlds' currency.

The Forex is considered by many to be risky. Pensions are not invested in Forex often. However, if you have time to educate yourself, Forex is where you want to be. George Soros is a great example of what can be accomplished using the Forex form of investing. Soros shorted the British pound sterling and, at one point made $2,000,000,000 in profit. On The Quantum Fund, he makes over sixty percent returns, which he owns, and has management over $4,000,000,000. However, even Soros has lost money. He says "I simply make a lot of money when I am right...and lose as little money as possible when I am wrong." Being right half the time is what Soros figures himself at, but he does very well in that half. He studies a country and it's stock market for trends, if he believes the markets are wrong and he goes opposite, he makes big profits.

Soros lost $200,000,000 in just one day in October 1987. His reaction to this was very calm. "I made a very big mistake, because I expected the crash to come in Japan and I was prepared for that and it would have given me an opportunity to prepare for the fall-off in this country and actually it occurred in Wall Street and not in Japan. So I was wrong!" Of course, Geroge Soros is, of course, an extreme case. How many among us can loose $200 million and be ok with it? But the moral of the story is the same. If you make a mistake, take what you have learned and move on. There is a lot of money to be made if you are not afraid to learn and take risks. While this type of investing is not for every one, if you have time to learn the ins and outs of Forex, your chances of big returns are favorable.
About the Author
Nick Makaryk is an Internet Publisher, Copywriter, and Founder of Best Credit Cards A Free consumer credit card comparison site helps consumers find the Best Credit Card while avoiding high interest rates, charges, and fees.
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