Why trade currencies?

Let's take a look at why one would want to buy currencies over stocks.

For starters you can earn DAILY interest by buying these currency pairs rather than earning QUARTERLY dividends in the stocks. This is a huge advantage.

 You’ll also enjoy better fills on your orders (even market orders) since the currency market has more volume than all stock markets of the world combined.

 You’ll also enjoy the benefit of the extra leverage. Generally in stocks you can leverage 2 to 1 or 4 to 1. In currencies you can leverage up to 400 to 1 with 100 to 1 being much more common.

 Now this doesn’t mean you should use all of this leverage. You know a Corvette may go 190 miles per hour but it doesn’t mean you should drive that fast. You should obey the speed limits instead.

 Well currencies are the same way. They can be highly leveraged. However, when you increase the leverage to just 10 to 1, you’re greatly increasing the DAILY interest that you receive on your position. Plus, if you’re right in your assessment of where the market is going, you’ll gain far more than you would in the actual stock index that it tracks.

 But remember that leverage is a double edged sword. So if you could gain more, you could lose more too. So make sure you remain reasonable about how much leverage you choose to use.

 Now back to the benefits of trading currencies….

 Remember that you can get into a currency pair (or get out of a currency pair) 24 hours a day Sunday evening through Friday evening. So if you hear of some bad news and the stock market is closed, you can still exit your currency position while the stock traders can only bite their nails and wait for the opening. There are minimally several times a year where this facet could be of great help to you.

 Even though you can buy and sell short in stocks, most of the big money is “long only”. That means that they’re really only making money as stocks go up. But they’re losing their shirts when stocks decline.

 However, in currency pairs one is always going up and the other side of the pair is going down (and vice versa). So it’s no big deal to “go short” in currencies like it is in the stock market.

 Keep all of these “perks” in mind as you consider trading currencies. I think you’ll find that it’s a superior market in many ways. I know I did.