It is my belief that Forex is hands down the best market for new traders. When everyone thinks about trading, they automatically think about the Stock exchange. What they don’t understand is that it cost a lot of money to actively day trade the stock market. By law, the SEC, requires a large minimum balance for day traders. In this article, I will give you several examples why new traders will find it easier to trade the Forex market as day traders and as other short time frame based currency traders in this market.
There are some inherent advantage to Forex. The first benefit is that you can fund an account with a broker with as little as $5 and as much as a million. Forex makes it so that any trader, no matter their account size has an opportunity to trade. Another advantage of Forex is the fact that you have a lot of leverage you can use, you can use up to 1:400 leverage with some Forex brokers. Leverage is the same as buying with margin. Stock brokerage accounts do not provide this amount of leverage. All short term traders need high leverage to make the most out of their small incremental wins.
More opportunities to trade equals more money that can be made. The stock market opens at around 8 in the morning and closes before 5 pm, that is a short window to trade and makes it so that anyone with a day job can’t trade. Forex doesn’t have this problems. Forex is a 24 hours market that you can trade anytime of day. It is a global market with participants from all around the globe trading at every hour of the day, it never closes. You can trade before work and after work.
Open crossover is another reason why Forex is so great. Although, the Forex market is open 24 hours, it does have several opens. An open is when a countries banks start trading. For example, London’s open is at 3 am EST and the US open is at 9 am EST. There are also opens for the Asian countries too. What this means that their is a ton of liquidity being pumped into the market through out the day. When these trading periods cross over you have a ton of people moving the market. For day traders and scalpers this is a goldmine.
As you can see, Forex is the best market for a new trader to trade. They will find greater success in Forex than in any market. It is also easier to open an account and get high leverage in Forex. One of the great benefits of Forex is that it is a 24 hour market that you can trade day or night. A new trader can go to work in the day and come home and trade during his or her leisure time. It is a market that gives the trader the advantage.