Forex Trading VS Stock Options

Forex Trading VS Stock Options 1

Forex trading is a financial market where you can trade national currencies in order to make profit. If you develop a good strategy, you can make good profits from this business. Options trading on the other hand allows you to buy and sell stocks on large amount of stocks if you feel that they will go up or down in future. Just like with forex trading, you can be able to leverage your buying power with stock options in order to have more control over futures or stocks.

Forex trading gives you the ability to trade 24 hours a day unlike stock market. This means that you will have longer trading hours more than any other market. It is the best trading option if your goal is to make double digit profits. You do not have to wait for the market to open in the morning like it is with stock market. As long as you have a computer with internet access, you can trade instantaneously, 24 hours a day.

With forex trading, you will be able to receive immediate trade executions. You will not encounter delays as you sometimes will in stock options and other markets. Your order will also get filled at the best price in forex trading rather than guessing the price at which your order might get filled. It usually have problems with slipping orders. When you are trading in the forex market, you will have more liquidity that will help you with the slippage.

Forex trading has liquidity than stock options and any other market. The average daily volumes are over three trillions, something which makes this market to far surpass stock options and any other trading market. You can make your trades at a higher speed in order to maximize your profits. Forex trading is also a commission-free market. This implies that you will not have to deal with any middlemen to facilitate your trades. Forex trading firms usually make money from the spread between the bids and ask price. With stock options, you will be dealing with a brokerage firm which will require you to pay commissions.

You will also get greater leverage when trading in the forex market than stock options. If you want to increase your leverage with stock options, you will need to use putt and call options. Leverage will be of great importance especially if you can predict the behavior of currency in future. With forex trades, you can achieve 200:1 or even greater compared to stock options. As long as you make the right move, you can use the leverage to make substantially more profit.

Since you are required to have position limits when trading in the forex market, the risk of losing your money is limited since forex trading systems usually have capabilities that automatically initiate a margin call when the margin amount is found to be greater compared to the value of money in the account. This safety feature is not found in stock options and other financial markets.

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