Get Out Of Debt

Forex and stock comparisons all over the net are going to show the benefits of selecting to trade in currency exchange. Of course if you’re looking for long term investment then that is another thing, except for speculative traders the currency exchange has many special features that make it particularly tasty. Here are the top five reasons for choosing forex trading over stock trading.  

1. Twenty-four Hour Market

One practical advantage of the foreign exchange market is that it is open for trading 24 hours a day Monday thru Fri.. This is as of the worldwide nature of the market and the proven fact that it is always business hours somewhere in the world, excluding weekends and holidays. So a forex trader can work a real job and trade in the evenings or early mornings.

2. Liquidity

Currency is liquid obviously, if liquidity measures the ease of converting an asset into money. More frequently it is taken as the quantity of money in a market. On this, too, currency scores very high.

Turnover in the forex market was nearly $4 trillion per day on average according to a survey by the Bank For global Settlements in December of 2007. It has probably exceeded that now.

This is significantly more than is traded on all of the stock exchanges in the world added together. In foreign exchange you aren’t restricted to trading in your own country or on your own country’s currency, so the benefit to this trader of being part of this huge market is clear. You have a much better possibility of getting the price that you see or the price that you want.

3. Openness

an additional benefit stemming from the sheer amount of cash in this market and its high trading volume, is the openness of the market. There’s very little opportunity for insider trading in a market which deals with the economic performance of whole countries and involves each major financial establishment in the world. This means that the retail trader isn’t off balance to the limit that might be true in the stock market and lends more weight to our forex stock discussion.

4. Leverage

Leverage is the trader’s most essential tool in that it permits a tiny fund to control a huge position size, resulting in a big proportional return on investment, assuming that you are lucrative. The leverage offered by forex brokers is higher than in stock trading.

In foreign exchange, one hundred times leverage is seen as standard or low, 2 hundred times is common and 400 is possible in some circumstances. Of course this makes forex trading extremely risky but for a successful trader it’s a serious advantage because it means more money can be made from less.

5. Trade Both Directions

When you trade foreign exchange, you’re frequently working with a currency pair, exchanging one currency for another. This means that you can trade in both directions. For example if you are trading EUR/USD, you can start by making an investment in either Euro Bucks or US greenbacks depending on which one you think will rise. So you can buy or sell the pair ( go long or go short ).

In a way this is like trading stock options or futures, but with more suppleness. The flexibleness comes from the indisputable fact that currency values are relative to each other. They cannot all fall at the same time, as stocks can. So this is another point for currency exchange in the currency exchange stock comparison.

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Darvas Trading System: Secret To His Success

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Presenting two additional advanced Nicolas Darvas entry tactics that a trader might use when trading the Modern Darvas method. Now in my opinion these two additions are contrary to the original Darvas’ methodology, that said keeping in mind this course is the definitive guide to Nicolas Darvas trading, I felt it necessary to include them.

The two extra tactics are the aggressive entry and the delayed entry. Each entry tactic is suited to different types of traders and trading situations.

When trying to decide which entry tactic to use, it is best to consider the situation. For example, suppose a trader finds a stock that has already formed several Darvas boxes. An aggressive entry into the stock might be more beneficial and profitable, than a classic entry. The classic Nicolas Darvas entry tactic is to buy as soon as the stock price breaks out of the current Darvas box, and the Modern method is to buy the day after the stock closes above the Darvas box. Both of these methods would cause a trader to lose a portion of the profits in this situation. The alternative Nicolas Darvas entry tactics exist to allow traders to enter into a trend in such a way that the trend yields more profit.

Aggressive entry occurs when a trader buys a stock before it has broken out of its Darvas box. The trader buys in anticipation of the stock breaking out of its box. Buying before the breakout is risky because there is no assurance that the stock will actually break out of its Darvas box. The trader is making a guess that it will. The advantage to buying before the breakout is that the entry price will be closer to the stop-loss order.

Another consequence of buying before the breakout is that a trader can possibly capture more profit from the beginning of the trend. However, in today’s volatile markets, a stock is almost as likely to plummet as to rise. Buying before the breakout puts the entry price closer to the stop-loss order. Should the stock plummet, the trader will lose less money.

Delayed entry is when a trader will not buy on or directly after the breakout, but will wait for the price to come back down. In a trend where a stock is just starting to form Darvas boxes, this tactic can increase the amount of profit. Instead of buying on a high, the trader will buy on a low, most likely one of the lows used to form the next Darvas box. This entry point is closer to the stop-loss order set by the previous valid Darvas Box and minimizes any loss should the trend fail.

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