7 Reasons Why You Should Invest Forex Over the Stock Market


There may be an infinite number of reasons why you may be drawn to the prospect of investing but as a whole, it tends to boil down to the prospect of generating profits from your hard-earned money.

In essence, you are trying to make your money work for you – which, when you think about it like that, seems like a rather welcome turn of events considering how most of us work extraordinarily hard for the income that we currently have.

Given the timing of this publication, more people than ever before, are seeking alternative methods of generating money online from home as a result of the widespread and detrimental effects exhibited by the Coronavirus.

Over 6 million US citizens, for instance, have filed for employment as a result of job loss or furlough as COVID-19 continues to shutter world economies and ridicule consumer-centric businesses that once thrived before self-isolation and quarantine become a regular part of our daily life.

This publication’s aim is to provide you with the insight required on why you should be considering the investment of forex over that of the stock market along with providing you with the detailed oversight of where you can preemptively begin your journey.

Decentralized Market Equates to More Competition

One of the nice advantages regarding the foreign exchange market would be how it functions as a decentralized market.

This means that no middle man is overseeing every aspect such as there are in centralized markets.

Now I know what some of you may be thinking, wouldn’t it be more secure or ‘better’ to invest with a centralized market over a decentralized market?

Well, to be honest, that comes down to the style of trading that is more suited for your style of investing but here are a couple of reasons why a decentralized market tends to attract more traders.

  1. Centralized markets, all of which have a party nested between the trader and the provider of the buying/selling services of a security or instrument, will resort in some form of cost – whether it boils down to cost in time or trading fees – so, in the end, it will cost you more than a decentralized market service.
  2. Since decentralized markets lack this intermediary, there is a surplus in competition between service providers which not only ensures that traders get a more cost-efficient trading opportunity but also more diverse and swifter access to trade executions.

You can learn more regarding the decentralization and regulation of the FX market in our comprehensive Forex Regulations Guide (2020).

What Happens in 60 Seconds in Forex – Image Source: www.bis.org.

Greater Liquidity and Tighter Spreads

We made it is a point in our Forex Regulations Guide to emphasize just how vast the foreign exchange market is in relation to the stock market.

To recap upon that, the forex market is approximately 20x greater than that of the stock market, generating a daily turnover of around $5.1 trillion per day whereas the stock market is just over $200 billion.

This is an astronomical difference that has significantly varying effects.

Two such effects include that an increase in volume oftentimes equates to an increase in liquidity while an increase in liquidity oftentimes leads to a decrease in transactional costs (most of which are integrated as low spreads – where coincidentally most forex brokers already have their fees integrated into).

More Available Market Hours

The stock market is open for roughly a third of the time of the foreign exchange market.

Remember, the NYSE stock market is open from 9:30 A.M. EST to 4:00 P.M. EST during weekdays (while being closed on market holidays) whereas the foreign exchange market is open 24 hours a day through varying regions across the globe from 5 P.M. EST (Sunday) until 4 P.M. EST (Friday).

Given the nature of the foreign exchange market, where the world’s major economic currencies are traded, a 24-hour trading period is a necessity since major countries tend to reside within different time zones – it only makes sense when you stop to think about it.

More available market hours equate to not only more trading opportunities but may also equate to a style of trading that is more flexible for you given pre-existing responsibilities that you may have in your life that would prohibit you otherwise.

Forex Market Hours
Forex Market Hours – Image Source from Investopedia.com.

Refined Investment Scope

Many traders tend to labor under the delusion that having access to more investable assets is an advantage when it comes to trading – and in a way, it is an advantage but also a disadvantage.

You see, the advantage of having access to more assets (sometimes referred to as financial instruments) is that you may have access to assets that you may have ordinarily been deprived of should you have considered a different style of trading.

The NYSE (New York Stock Exchange) and the NASDAQ exchange combine for over 3,000 investable assets whereas with the forex market there may be several dozens of currencies that are capable of being traded but really when the dust settles only a handful are traded on a seemingly ritual basis.

Now, this isn’t a question of your intellectual prowess but rather an honest self-awareness assessment, do you feel that you could truly monitor, analyze and breakdown the sentiment of over 3,000 stocks compared to a handful of the world’s strongest economies?

Again, it boils down to the simple matter of time management and knowing your limitations – which is where the volume of investable stock market assets does not equate nor compute well in retrospect of the human’s mental capability to process such a vast sum of data effectively.

To sum it up, there are advantages and disadvantages on both ends but when it comes down to it it is much less difficult to manage a handful of assets than that of a few thousand.

Greater Market Volume Equals Less Influence

The immense volume of the foreign exchange market renders a decreased probability of broker firms, hedge funds, and big businesses to influence the FX market – which is certainly not the case with the stock market.

Not only does this make forex trading a far more attractive opportunity for retail traders (due to a decrease in market influence) but it further solidifies the staggering fact of how the foreign exchange market is a necessity of global market longevity and growth.

Enabled Short-Selling

As many of you know, the equity market prohibits short-selling.

Considering the decentralized nature of the foreign exchange industry, however, no structural bias is integrated into market flow while traders have the opportunity to hold positions for as little or as long as they seem fit.

Regardless of the occasion, you have the advantage of being able to leverage a constantly rising or falling market since currency trading directly involves the buying or selling of one currency against another.

FX Option
Image Source: talk-business.co.uk.

Forex Offers Greater Versatility Than Stocks

We are using the term versatility with respect to the platform advantages that are offered to a foreign exchange trader to that of the stock market trader, not about the scope of investable assets at your disposal.

When it comes to the versatility that is rendered through regulated trading platforms that support the buying and selling of foreign exchange currency pairs you are oftentimes acquitted with more trading features that can improve your probability of success.

Among such tools include stop-loss, take profit, and leverage trading features.

Having a stop-loss set in your active trades not only serves as a risk-reduction measure but can mitigate the losses that may result as a byproduct of volatility.

Take profit is another crafty trading feature that allows a forex trader to automatically exit a trade should the price of a particular asset they are investing meet a certain value.

This enables traders not only to navigate freely away from the computer but also serves as another method to mitigate risk should a major news announcement regarding a particular currency make national headlines (which coincidentally you can use an economic calendar to assist you with knowing ahead of time).

Leverage is a double-edged sword that you must be careful with.

It can significantly magnify your trading gains but can also cripple your account should the market take a turn for the worse.

All-in-all, however, forex trading provides a wide number of advantages that are not matched through the investment of the stock market and given the sheer scale of the foreign exchange market and its many advantages it is easy to also understand why more and more traders are transitioning from stock market trading to forex trading.

divergence university curriculum
Divergence University Curriculum & Courses.

How to Get Started with Forex Trading (2020)

While we have armed with you the facts and advantages surrounding the foreign exchange market that may not bring some of you closer to knowing where to begin.

With that in mind, we have a wide number of resources available at your disposal that we believe that you could benefit significantly from.

If you are interested in forex trading more for the long-haul and don’t mind putting in the hard work then you may want to consider investing with an educational provider such as Traders Academy Club or Divergence University.

Both educational hubs are the brainchild of Vladimir Ribakov, a Certified Financial Technical and a full-time forex investor of over 14 years.

Forex Peace Army Traders Academy Club Reviews
Forex Peace Army Traders Academy Club Reviews.

At Traders Academy Club you’ll be immersed in the nitty-gritty fundamentals while becoming vastly adept within the advanced complexities that are an inevitable byproduct of trading methodologies custom-tailored to tackle pips within the foreign exchange market.

However, if you are more interested in, let’s say, online trading systems that are semi-automated then you could consider checking out a couple of relevant reviews we conducted regarding the March 2020 monthly performance for the following two systems:

Additionally, you may connect with us at any moment through our email support@vladimirriribakov.com.

If you have found value or thought my publication was interesting please share your feedback with us below and make sure to stick around for more publications to come!

Tim Lanoue

Online Blogger


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2 years ago

Thanks for this nice article