Beginner or intermediate traders why forex trading is easy and profitable than stocks.
The forex market will be open 24/7 and 5 and half days in a week because of the big 6 major currency exchange overlapping trading hours.
The first currency exchange to open is New Zealand followed by Sydney, Tokyo, German, London, and finally the US, by the time the US market about to close, New Zealand exchanges will open and followed by other countries.
So you can trade forex around the clock,
And the stock market in India and around the world operates 6 hours a day in India it starts from 9:30 in the morning and closes at 3:30 PM and the stock market in other countries also more or less opens around 9 AM and it is exactly office timing for most, Analysing to buy and sell stocks during office hours will keep you less productive in both trading and office.
And the next important point is.
Forex is the largest financial market in the world with 5.5 Trillion Dollars transaction per day, Hence buying selling and liquidity will happen instantly around the clock.
The next most important point is Leverage.
Most forex broker starts leverage from 1: 50, 1:200, and 1:400, and there are some brokers who will provide more than 400.
Leverage is a kind of credit given to you by your broker to increase your buying potential. It helps both trader and broker, As a trader, if your leverage is 1:400 it means every one dollar of your investments is equivalent to 400 dollars,
The more you buy and sell brokers makes a profit from you through the brokerage.
Suppose you have 200 USD in your forex trading account with 1:200 leverage you can buy hold and sell worth 80,000 it increases your profit and loss ratio also.
Forex is commonly traded in LOTS, LOTS are basically the number of currency you will buy and sell.
If you place one standard LOT buy order in EURUSD it means you have purchased 100,000 units of EUR, Profit and loss will be calculated for 100,000 units of EURO, and there is also mini and micro LOT size, Mini LOT is 10,000 units and micro LOT is 1000 units.
Let’s assume the current market price of one euro is 1.13 USD to buy and sell one standard LOT without leverage you will need 113,000USD with the help of 1:200 leverage all you need is 1000USD and you will have extra 100,000 in your trading account all thanks to leverage and broker and the profit and loss will be calculated for 100,000 units
But in stock market leverage in India starts from 1:7 1:10 and 1:50 maximum so the 200 USD with 1:50 leverage is only 10,000. and if you want to take delivery of stock and hold the position for 3 months you will have to pay the full amount of the stock
With 200USD if you want to buy and hold stock worth 30USD for the long term you can buy only 6 stocks, and profit and loss will be calculated for 6 Stock only.
But with 200USD in the forex trading account with 1:200 leverage, you can buy a mini lot and your profit and loss will be calculated for 10,000 Euros.
Your forex broker does not mind whether you are trading Intraday or long term by using the leverage you can hold the position for any number of days
Leverage is like electricity one should know how to use it wisely, using high leverage means more credit to buy and sell which can result in a huge profit or losing capital quickly.
However, there is a disadvantage in trading forex
The stock market is heavily regulated any buying selling and listing of companies goes through the exchange and monitored and data are tracked. But the forex market does not have any central exchange and it is called the OTC market or Over The Trade Counter, this means you are transacting currency from primary banks.
Since the forex market is unregulated this has created widow for some unethical brokers, choosing a wrong broker can be a fatal mistake you could lose money by broker manipulation or there will be huge clause at the time of withdrawing money
Choosing the right broker like CVC Markets helps you to become a successful trader
In my opinion trading forex is easier and profitable than stocks.