There are many reasons that convince us to believe trading Forex could generate results which are almost independent of trading stock (or rather equity). Here are some of those reasons.
Currency pairs pricing depends on the economic conditions of two different countries while stocks usually depend on the economic status of a company, an industry, or at most one country. The bottom line is that the fundamentals behind Forex and equities could be significantly different.
Market Open Time
Trading Forex is 24/5 which means you always have the ability to make your decisions based on the current condition of the market. Stocks are usually traded when the exchanges are open.
Leverage is higher in Forex which could result in higher gains and or losses.
You usually do not pay commission to trade Forex. In other words trading Forex could be cheaper.
You can easily trade currencies in both long and short directions. Trading stock in short directions come with limitations. This means that when you trade stock if the market goes down it is very likely that you are also losing money while in Forex if you go in the direction of the market whether up or down you are making money.
These does not necessarily mean that trading Forex is more profitable but they can indicate that your results from trading currencies could be way different from trading equity. I have recently made a short comparison between the behaviour of my forex trading system and the Dow Jones Industrial Average. Click here to read the short article. You may find it interesting.
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