Why has forex become the new favorite for investment compared to stock trading?

In the global financial market, forex and stock trading stand out as two brilliant stars, consistently capturing the attention of investors. Although the stock market attracts a large number of investors with its diversity of stocks and corporate growth potential, forex trading has gradually become a new favorite among investors in recent years due to its unique advantages. So, what are the remarkable advantages of forex trading compared to stock market trading?

Low Transaction Costs

The trading volume in the forex market is extremely high, exceeding $5 trillion daily. The high trading volume is due to exporters and importers needing currency, people traveling to other countries, buyers of foreign stocks and bonds, retail and institutional investors, as well as central banks, all engaging in forex trading. The multitude of trades makes it easy to find buyers and sellers for each currency pair, helping to keep transaction costs at ultra-low levels.

High Leverage

Due to the low risk of major currency fluctuations and low trading costs, along with a large number of traders, the forex market is equipped with leverage.

Forex leverage is similar to buying a house or apartment; you can establish a large position with a small initial deposit. For example, in some markets, you can buy a house worth $500,000 with a $50,000 deposit; the bank will lend you the rest. Platforms like 4E support leverage of up to 1000 times, allowing you to establish a position worth $10,000 with just a $10 deposit. A slight fluctuation of 0.1% in the currency pair can yield a 100% profit.

Low Manipulation Risk

The stock market carries higher risks because a few influential individuals and media personalities can push valuations in unfavorable directions. Sometimes, trading stocks may mean that a single tweet could wipe out your investment. We have seen how much influence Musk has on his company, Tesla's stock, and cryptocurrencies like Dogecoin and Shiba Inu. There’s also the impact caused by Trump’s comments on the market via Twitter. In contrast, the manipulation risk in the forex market is much lower because the currency market is too vast.

24/7 Trading

Forex trading is open around the clock, allowing people to trade at any time and on any day of the week. Therefore, some traders have developed unique strategies targeting the Asian, European, and American trading sessions.

Fewer Markets to Monitor

Trading in the forex market means you only need to focus on a few countries: the United States, Canada, the European Union, the United Kingdom, and Japan. Of course, you can also include Switzerland, New Zealand, Australia, etc., if you wish. However, most traders only focus on major countries.

In contrast, stock market traders need to monitor more companies, with major news potentially changing the price outlook of a stock for months each quarter.

Forex Trading is Closely Related to Macroeconomic Trends

The trading objective in the forex market is currency exchange between countries, rather than the performance of specific companies. This makes forex trading closely related to macroeconomic trends, making it more suitable for tracking international economic conditions.

Do you believe that the economic activity in the U.S. will outperform that of the Eurozone? Then you can buy USD against EUR, and if your view is correct, you can achieve substantial returns. There are also more trading viewpoints, such as the emergence of a new COVID-19 variant named Omicron in South Africa at the end of 2021, which led to the collapse of the South African Rand. For instance, the Russia-Ukraine conflict caused the Ruble to plummet; the demand for the dollar as a safe haven, along with the Eurozone's geographical proximity to Ukraine and reliance on commodity imports (especially natural gas), contributed to the Euro's vulnerability. Experienced currency investors make long and short trades based on these judgments.

Of course, forex trading is not limited to those interested in economics and politics. On the contrary, most people engage in forex trading using technical analysis, which involves studying historical price patterns.

Despite the numerous advantages of forex trading, investors should also be aware that the forex market carries risks. The uncertainty of exchange rate fluctuations, potential losses from leverage, and the impact of global events on the market all require cautious consideration from investors.

To Trade, Use 4E

In today's fast-paced financial world, finding a reliable platform is crucial. As a professional financial asset trading platform, 4E provides investors with a wide range of investment options. The platform enjoys a strong reputation in the international market and is the official global partner of the Argentine national team, supporting over 500 investment products including forex, gold, crude oil, stocks, cryptocurrencies, and indices, opening the door to diversified investments.

Especially in the field of forex trading, the 4E platform, with its unique advantages, supports nearly 20 currency pairs, creating opportunities for investors to explore the forex market. The platform allows trading anytime and anywhere, is easy to operate, fully functional, and low-cost, enabling both beginners and experienced investors to quickly get started.

Currently, 4E is holding a "Crazy Thursday" event, where trading forex and derivatives such as commodities every Thursday will earn you a 100% cash reward! Come to 4E, every Thursday, to embrace new trading opportunities and achieve higher returns!