Forex vs Stocks

On the Forex market, there are only six major currencies. This allows a trader to focus and concentrate on which currencies to trade. In the equities market, there are over 40,000 stocks to choose from. Which stocks do you choose?

On the stock markets, most people make money when shares are rising, but in economic recessions and falling 'bear' markets, there is little chance of making serious money. In the Forex market there is a big difference.

One of the most exciting advantages of FX trading is the ability to generate profits whether a currency pair is 'up' or 'down'. A trader can profit by taking a 'long' position (buying the currency pair at one price and selling it later at a higher price) or a 'short' position (selling the currency pair and buying it back at a lower price). In either case, there is always a good market trading opportunity for a currency trader. The ability to sell currencies without any limitations is a distinct advantage over stock trading.

For example: If you think the US dollar will increase in value versus the Japanese yen, then you will buy dollars and sell the yen (go long). If you think the yen will increase in value against the dollar then you will sell Dollars and buy yen (go short). As long as the trader picks the right direction, a potential for profit always exists.