There are many reasons why Forex should be prioritized as a short to long term investment over stocks or even real estate. Even though each has their own advantages, Forex is ahead in many different categories.
If you are looking to make a lot of money with a relatively small amount of money, or you simply want to kickstart your portfolio, then Forex is one of the best options available.
You can easily gain access to a leverage of 1:500 with most brokers. What that means is that for every dollar you have in your account, you are allowed to transact $500 worth of currency.
With great power comes great responsibility, though. High leverage also means that you are able to lose your entire account in the span of a bathroom break if you are not careful.
High leverage is best used to capitalize on small market movements. A few pips in profit will rarely be an attractive trade if the size of your trade is proportional to your portfolio.
Few markets move as fast as the Foreign Exchange. Fast movement means that you can get in and out of trades in a short amount of time. Why does this play to your advantage? Because you can grow your account faster by compounding your earnings more rapidly.
If you look at how the stock market moves, you will notice how big movements usually only take place when the market opens, or when big news is released. You are also going to have to keep your eyes on a multitude of stocks if you want to catch fast movements frequently.
In Forex, most major currency pairs will undergo some significant movements at the beginning of all four sessions (New York, Australia, Tokyo and London) every day, especially during the opening of their respective session. For example, the JPY would be more volatile when the Tokyo session begins.
It will also be common to see huge breakouts during the day, either because of economical news or because of certain price levels being tested.
For anyone who has been casually investing or trading the stock market, going short is way too much of a hassle. The process is not very user friendly for beginners.
Forex provides you with the option of going short as easily as going long. At the simple press of a button, you can achieve what seemed so complicated in the stock market.
This really is one of the biggest game changers, as you are exposed to many trading and investing opportunities that were not available before. This added convenience does not even come at an additional cost; the transaction fees are going to be the same as if you were to go long, while borrowing stocks from your broker to go short will usually come with added interests.
By going short, you can exploit negative news and make profitable decisions even during a crash, which will certainly bring consistency to your earnings during a period of financial depression.
There are many benefits from the currency markets being open for 24 hours during 5 days every week.
You get to choose at what time you want to trade. You could possibly trade at night after working your dayjob. Even though certain trading hours are not optimal, you will definitely gain a lot of experience by observing the markets live, whatever time it is.
There are also less gaps, since the markets do not close daily. You have more ease monitoring your positions and applying any needed modification when the open hours are so flexible.