CoinW reported:
In the global financial market, foreign exchange and stock trading, as two shining stars, have always been the focus of investors’ attention. Although the stock market has attracted a large number of investors with its diversity of stocks and corporate growth potential, foreign exchange trading has gradually become the new favorite in the eyes of investors in recent years due to its unique advantages. So, what are the remarkable advantages of foreign exchange trading compared to stock trading?
Low transaction costs
The trading volume in the foreign exchange market is very high, with a daily turnover of over $5 trillion. The high trading volume is due to the participation of exporters and importers of goods, people traveling to other countries, buyers of foreign stocks and bonds, retail and institutional investors, central banks, and others. The large number of participants makes it easy to find buyers and sellers for each currency pair, which helps keep transaction costs at a very low level.
High leverage
Due to the low risk and small fluctuations in major currencies, as well as low trading costs and a large number of traders, the foreign exchange market is equipped with leverage. Like buying a house or apartment, foreign exchange leverage allows you to establish large positions with a small initial deposit. For example, in some markets, you can use a $50,000 deposit to buy a house worth $500,000; the remaining money will be lent to you by the bank.
Low manipulation risk
The stock market carries higher risks because a few influential individuals and media figures can push the valuation in a direction unfavorable to you. Sometimes, trading stocks may mean losing all your investment with just a single tweet. We have seen the impact Elon Musk has had on his company, Tesla’s stock, and cryptocurrencies like Dogecoin and Shiba Inu. Even Trump’s tweets about the market have caused significant impacts. In contrast, the manipulation risk in the foreign exchange market is much lower because the currency market is too large.
24/7 trading
Foreign exchange trading is open 24/7, allowing people to trade at any time and any day of the week. Therefore, some traders have developed unique strategies targeting the Asian, European, and American trading sessions.
Less market focus required
Trading the foreign exchange market means you only need to focus on a few countries: the United States, Canada, the European Union, the United Kingdom, and Japan. Of course, you can also include Switzerland, New Zealand, Australia, and others if you wish. But most traders only focus on major economies. In comparison, stock market traders need to focus on more companies, as major news events can change the price outlook of a stock for months.
Foreign exchange trading closely related to macroeconomic trends
The goal of foreign exchange trading is the exchange of currencies between countries, rather than the performance of specific companies. This makes foreign exchange trading closely related to macroeconomic trends and more suitable for tracking the international economic situation. Do you think the economic performance of the United States will be better than that of the Eurozone? Then you can buy the US dollar against the euro and potentially earn significant returns if your view is accurate. There are also more tradable views, such as the emergence of a new variant of the coronavirus called Omicron in South Africa at the end of 2021, causing the collapse of the South African rand; the Russia-Ukraine conflict leading to the collapse of the Russian ruble; the safe-haven demand for the US dollar, and the vulnerability of the euro due to its geographical proximity to Ukraine and its reliance on commodity imports, especially natural gas. Experienced currency investors make long and short trades based on these judgments. Of course, foreign exchange trading is not limited to those interested in economics and politics. Instead, most people use technical analysis, which involves studying historical price patterns, to trade foreign exchange.
Despite the numerous advantages of foreign exchange trading, investors should also be aware that the foreign exchange market carries risks. The uncertainty of exchange rate fluctuations, potential losses from leverage, and the impact of global events on the market all require caution from investors.
To trade, use 4E
In today’s fast-paced financial world, finding a reliable platform is crucial. As a professional financial asset trading platform, 4E trading platform provides investors with a wide range of investment options. The platform enjoys a good reputation in the international market and is the official global partner of the Argentina national team. It supports trading in over 500 investment products, including foreign exchange, gold, crude oil, stocks, cryptocurrencies, and indices, opening the door to diversified investment.
Especially in the field of foreign exchange trading, the 4E trading platform creates opportunities for investors to explore the foreign exchange market with its unique advantages, supporting nearly 20 currency pairs. The platform supports trading anytime, anywhere, with simple operation and full functionality, making it easy for both beginners and experienced investors to get started.
Currently, 4E is holding the “Crazy Thursday” event, where trading in foreign exchange and commodities derivatives on Thursdays can earn a 100% cash reward! Come to 4E every Thursday to embrace new trading opportunities and achieve higher returns!
