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Forex market vs. the stock market
Traditionally the forex
market has not been the most popular to negotiate because it was
restricted primarily to arbitrage funds, multinational corporations
and institutional investors, who possessed the capital and
technology required by existing regulation.
One of the main reasons why the forex market has been used by
these agents is because it is assumed that the risk can be adapted
to suit each one. That is, an
investor can use leverage of 100:1, while another may decide not to
leverage. However, in recent years, many
brokerage firms have opened this market to the small investor,
providing leveraged transactions and automatic execution platforms
and free graphics and real-time news.
The
reason behind this trend is that investors are beginning to
recognize that this market has many virtues compared to the
traditional markets of stocks, bonds and futures.
These are some of the main virtues of the forex
market:
- The FX market
is the largest and most liquid in the world.
- Is traded 24 hours a
day.
- The investor can benefit in a market
upward or downward.
- Can be
sold short without any restrictions.
- Platforms for
immediate implementation to avoid the errors and the orders are
satisfied with the price you get.
- Although
the greater leverage involves greater risk, many investors see the
forex market as more profitable.
And the virtues of the stock
market:
-
There is a liquid acceptable, but it depends on each share
and volume.
- The market is
open 24 hours a day. In many
countries, open 7 hours or less. In Colombia open 9:00 a.m.
to 1:00 pm
- The existence of committees does
make transactions costly small.
- In many markets there are rules for
short selling in an action, in other there is not even that
option, such as the Bolsa de Valores de
Colombia.
- The number of steps required to
complete an order to raise the likelihood of errors and that the
order is not met the expected price.
The volume and
liquidity in the forex market, one of the most liquid of the world,
has enabled investors to access the market 24 hours a day with low
transaction costs, high leverage, the ability to gain both a rising
market to the downside and a lower risk of getting a price different
from that expected. Investors can
implement in the forex market the same strategies that are used in
the stock market. For technical
investors, the FX market is perfect for technical analysis as this
is the tool used by professional investors. Therefore it is important to analyze in
detail each of these attributes and virtues to understand that this
market is so attractive.
Entrarremos in the next article on this subject in
detail.
