Forex market vs. the stock market

Traditionally the forex market has not been the most popular to negotiate because it was restricted primarily to arbitrage funds, multinational corporations and institutional investors, who possessed the capital and technology required by existing regulation.

One of the main reasons why the forex market has been used by these agents is because it is assumed that the risk can be adapted to suit each one. That is, an investor can use leverage of 100:1, while another may decide not to leverage. However, in recent years, many brokerage firms have opened this market to the small investor, providing leveraged transactions and automatic execution platforms and free graphics and real-time news.

The reason behind this trend is that investors are beginning to recognize that this market has many virtues compared to the traditional markets of stocks, bonds and futures.

These are some of the main virtues of the forex market:

1. The FX market is the largest and most liquid in the world.
2. Is traded 24 hours a day.
3. The investor can benefit in a market upward or downward.
4. Can be sold short without any restrictions.
5. Platforms for immediate implementation to avoid the errors and the orders are satisfied with the price you get.
6. Although the greater leverage involves greater risk, many investors see the forex market as more profitable.
   

And the virtues of the stock market:

1. There is a liquid acceptable, but it depends on each share and volume.
2. The market is open 24 hours a day. In many countries, open 7 hours or less. In Colombia open 9:00 a.m. to 1:00 pm
3. The existence of committees does make transactions costly small.
4. In many markets there are rules for short selling in an action, in other there is not even that option, such as the Bolsa de Valores de Colombia.
5. The number of steps required to complete an order to raise the likelihood of errors and that the order is not met the expected price.
   

The volume and liquidity in the forex market, one of the most liquid of the world, has enabled investors to access the market 24 hours a day with low transaction costs, high leverage, the ability to gain both a rising market to the downside and a lower risk of getting a price different from that expected. Investors can implement in the forex market the same strategies that are used in the stock market. For technical investors, the FX market is perfect for technical analysis as this is the tool used by professional investors. Therefore it is important to analyze in detail each of these attributes and virtues to understand that this market is so attractive. Entrarremos in the next article on this subject in detail.