Why trade forex?
What sets currency trading apart, and how it compares with stocks and futures.
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Lessons
- 01Why do people trade forex?People trade forex because the market runs around the clock from Sunday evening to Friday evening, New York time, major pairs are liquid with usually narrow spreads, and selling a pair you expect to fall is as simple as buying one you expect to rise. Small trade sizes and leverage add access, and leverage also makes losses larger.
- 02Forex vs stocks: what is the difference?Stocks are shares in single companies, traded on exchanges with fixed hours. Forex is the trading of one currency against another, over the counter, about 24 hours a day on weekdays. Forex accounts usually offer more leverage and charge or pay overnight swap. Currency prices follow two economies at once, while a share price follows one company.
- 03Forex vs futures: what is the difference?Spot forex and forex CFDs trade over the counter through a broker, in flexible sizes often down to 1,000 units, with no expiry and a nightly swap. Currency futures trade on an exchange in fixed contract sizes, expire on set dates, settle gains and losses every day and build the interest difference into their price.