Forex Versus Other Markets

FOREX markets are very liquid. That is, you can withdraw or cash in your investments relatively faster and cheaper than most other types of investments. Say for example, it may take you weeks or months before you are able to cash in on your real estate, antique collection, car, or fixed deposit in a bank (where you might pay a surcharge for cashing prematurely). Moreover, in all the above mentioned scenarios, except the fixed deposit, if the buyer learns that you need cash rather urgently, you might not get the fair market price of your original investment!

Non-Monopolistic:

It is estimated that the daily turnover in the FOREX market is around US$ 1.3 Trillion to US$ 4.5 Trillion. It can then be safe to state that a market of such huge volume will be difficult, if not impossible, to be controlled or monopolized by a single entity. It will take a huge financial effort to target any particular investor to incur loss or profit. A vigilant trader/investor will get a chance to observe several indicators and take necessary precautions before there is a big change in the exchange rates.

Non-Stop Trading:

Almost all of the stock exchanges have limited working hours. All the trading must be completed within this period. It means that if you have a losing position and could not dispose of it the same trading day, you will have to wait for the next trading day. In the meantime, there might be some news reports or world figures which may affect the category of the business, or the company of which you hold stock. But you can't do anything about it because the exchange is closed for the day!

Foreign currencies, on the other hand, being foreign to all but one nation, may be traded all around the world, 5 days a week and 24 hours a day. For example, a transaction originates in Tokyo, Japan and carried over to Hong Kong . By the time the Hong Kong markets are closing, the European markets are open. By the lunch time in London, the New York markets join the action. Shortly after that, the US west coast markets kick in. Just before the west coast markets call it a day, the New Zealand markets are opening, and shortly after that, the Australians start their business day. An hour after that, the Japanese markets are open. So, you see, the FOREX market never sleeps.

Large banks with branches in several countries usually have at least one trading desk open until the next one joins the action. The same is true for large brokerage houses, which usually have trading links with several other brokerage houses or their own branches, which form a global trading network that is operational at any point on the globe at any given instant!

Hence, in today's day and age, a FOREX investor/trader is able to trade almost 24 hours a business day, 5 days a week. Enabling him or her to take advantage of any development anywhere in the world, while the local stock market sleeps.