Open Trading Account
Open Demo Account
Currency Trading
IFT Trading Accounts
Login IFT Trading
Deposit Funds
Withdraw Funds
IFT Demo Accounts
Login Demo Trading
Trading with BizFOREX
  Business Solution  
  Interest Payment  
IFT News
  IFT Prognosis
  IFT Calculators
  IFT Message
  User Guide  
  Contact Us  
  Currency Trading  
About BizFOREX  

Home Currency Trading Benefits of Currency Trading

Benefits of Currency Trading vs. Equity Trading

Historically, smaller-scale, individual investors have had limited access to the FX market. Major banks, multinational corporations and other participants, trading in large transaction sizes and volumes, have dominated this market for decades. Technology (such as BizFOREX's unique, proprietary IFT Platform), however, has lowered the barriers of entry and opened up this attractive marketplace to a new breed of FX investors and speculators. Increasingly, FX trading is winning favor as an alternative investment opportunity. The following are some of the benefits of trading currencies vs. trading equities:

Continuous, 24-hour trading
The currency exchange market is a true 24-hour market. Equity trading is restricted to the operating hours of the various equity exchanges. While after-hours trading has become available through Electronic Communication Networks (ECNs), there are no guarantees that the market will be liquid at all times, or that trades will be executed at "market prices".

High liquidity and greater efficiency
Trading volume in the currency markets can be 50-100 times larger than the New York Stock Exchange. Twenty-four hour, five day per week accessibility greatly increases the probability of finding dealers willing to buy or sell currencies at fair market price. Equities are more vulnerable to liquidity risks due to limited trading volumes and market accessibility. In the less liquid equity markets, large price movements may occur when individual transactions take place.

Intra-day volatility
Large volume and liquidity combined with fewer instruments generates greater intra-day volatility in the currency markets than exists in the equity markets. This volatility can be profitably exploited by day-traders.

Typically, margin ratios associated with trading currencies are higher than those associated with trading equities. This is primarily attributed to the higher levels of liquidity within the currency markets. Margin trading allows FX market participants to trade much larger amounts than they have deposited. For example, with a margin ratio of 50:1 and a deposit of $10,000, an investor/speculator can trade amounts up to $500,000. Trading in larger volumes, in turn, allows these investors/speculators to take better advantage of small price movements.

Profit potential regardless of market direction
By definition, an investor with an open position is long one currency and short another. If a trader believes a currency is about to depreciate, he/she sells that currency short and goes long another currency. In the currency markets, selling or shorting is a necessary component of completing a trade. Profit potential exists in the FX market regardless of whether a trader is buying or selling and regardless of whether the market is moving up or down. In the U.S equity markets, short-selling is less common and more difficult to transact due to certain market rules and regulations. This makes it more difficult to profit when the stock market and/or the share price for a particular stock begins to head south.