Education

10) Equal access to market information.Professional traders and analysts in the equity market have a definitive competitive advantage by virtue of that fact that they have first access to important corporate information, such as earning estimates and press releases, before it is released to the general public. In contrast, in the Forex market, pertinent information is equally accessible, ensuring that all market participants can take advantage of market-moving news as soon as it becomes available.

11) Profit potential in both rising and falling markets.In every open FX position, an investor is long in one currency and short the other. A short position is one in which the trader sells a currency in anticipation that it will depreciate. This means that potential exists in a rising as well as a falling FX market. The ability to sell currencies without any limitations is one distinct advantage over equity trading. It is much more difficult to establish a short position in the US equity markets, where the Uptick rule prevents investors from shorting stock unless the immediately preceding trade was equal to or lower than the price of the short sale.

12) Most brokers have very good trade execution software. There are only a handful of stock brokers that have execution platforms that offer order-cancels-order type controls and other contingent orders. Ive looked at several forex-based platforms, and forex brokers place a premium on putting high levels of functionality into traders hands. This makes business sense if you find it easier to execute your strategy, youre likely to trade more often. This is one area where the equities world could learn a thing or two from their forex counterparts.

13) Trending nature of currencies. Major currencies are still dominated by central banks, national financial policies and macro trends. This means that currency traders enjoy markets that have a greater tendency to trend than most markets. I have seen some compelling data on this trending characteristic of the currency markets. (Special note if anyone has seen recent data on the trending nature of currencies, please let me know at drbarton@iitm.com. Most of the research I have is a few years old.)