Forex Market Comparison
Forex vs. StocksOpen an account
|Forex vs. Stocks Advantages|
|Advantage||Forex Market||Futures Market|
|Pay No Commissions||Yes||Limited|
|Trade Around the Clock||Yes||Limited|
|Market Information Easily Available||Yes||Yes|
|Level II Pricing||Yes||Yes|
Pay No Commissions
In the forex market costs are confined to the bid-ask spread. FXCM charges no commission or additional transaction fees. In the stock market, "no-fee" programs are frequently offered only with provisos mandating minimum account balances or minimum trades per month.
In our No Dealing Desk forex execution model, FXCM does not typically charge a commission. Although commission charges may apply to accountholders who trade with FXCM's best spreads - awarded to clients who trade very actively in the market - most accountholders only pay the spread to transact trades with FXCM. This is true regardless of balance and trade size. FXCM has relationships with global banks, financial institutions, and other market makers that provide FXCM with competitive spreads. These relationships help to keep transaction fees low for our clients.
In the stock market, "no-fee" programs are frequently offered only with provisos mandating minimum account balances or minimum trades per month.
Trade Around the Clock
The forex market is a near-seamless 24 hour market. Subject to available liquidity, FXCM offers trading from Sunday, starting after 5:15 p.m. ET, until Friday, 4:55 p.m., ET (FXCM Client Service is available 24/7). Orders placed prior may be filled until 5 PM (ET). With the ability to trade around the clock, currency traders have the advantage of customizing their own trading schedule; they can usually get in or out of the market at any time without waiting for an opening bell or encountering a market gap. While trading stocks after usual market hours is possible, very often that possibility is negated by a lack of order flow or a drastic widening of the bid-ask spread.
24-Hour Market Action
Unlike most futures exchanges, the currency market is a seamless 24-hour market. Subject to available liquidity, at 5:15 p.m., Sunday, New York time, trading begins as markets open in Sydney and Singapore. At 7 p.m. the Tokyo market opens, followed by London at 2 a.m., and finally New York at 8 a.m. As a trader, this allows you to react to favourable or unfavourable news by trading immediately. If important data comes in from England or Japan while the U.S. futures market is closed, the next day's opening could be a wild ride. (Overnight markets in futures currency contracts exist, but they can only be thinly traded, are not very liquid and are difficult for the average investor to access.)
There is no restriction on short selling in the forex currency market, no matter which way the market is moving. Since currency trading involves buying one currency and selling another, a trader has the same ability to trade in a rising market as in a falling one.
Forex Market Information Easily Accessible
Information about stocks is abundant, but so are the stocks. Finding a trade opportunity in the equities markets may mean sifting through data on thousands of stocks, while the forex trader has only six major currencies to research. Additionally, the vital information that moves equity markets, such as revenues and profits, is proprietary and private, and sometimes subject to fraud, deception and insider trading. In contrast, virtually all of the news that bears on the forex market is in publicly disseminated reports from governments or research institutions, and released to everybody at the same time.
The knowledge you've gained in analyzing stocks is easily transferable to the forex market. Many of the economic indicators familiar to equity traders, such as payroll data and interest rates, affect the currency markets. And many technical traders have found the forex market to be particularly attractive, since currencies respond well to many of the common technical indicators, such as MACD, RSI, and Candlestick charting.
To learn more about transitioning from trading equity markets to trading in the forex market, contact the FXCM staff today at: +0808 234 8789.
Level II Pricing
The Active Trader Group provides lower commissions for high-volume traders. You can take advantage of this pricing on any of FXCM's platforms. If you choose to trade on the Active Trader platform you will also have a view of the available liquidity at each price level. The combined transaction costs of the Active Trader program (spreads + commissions) should be substantially lower than the transaction costs (spreads) available to the typical FXCM standard account.