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Nial Fuller

NIAL FULLER
Professional Trader, Author & Trading Coach

Why Forex is the Best Market to Trade

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By in Forex Trading Articles by Nial Fuller Last updated on | 6 Comments

forex_11. Forex is the largest financial market in the world.

The Forex market has daily volume of over $3 trillion per day, dwarfing volume in the equity and future markets combined. Such a huge amount of daily volume allows for excellent price stability in most market conditions. This means you likely will never have to worry about slippage as you would when trading stocks or commodities. The price you see quoted on your trading screen is the price you get.

2. Trade whenever you want; 24 hours a day 6 days a week.

There is no opening bell in the forex market. You can enter or exit a trade whenever you want from Sunday around 5pm EST to Friday around 4pm EST. There are 3 distinct trading sessions for you to take advantage of in the U.S., Europe, and Asia which allows you to trade on your own schedule and respond to world-wide breaking news. While it is possible to trade some stocks and commodities in the after hour electronic session, the liquidity is often very low and this makes prices extremely uncompetitive.

3. Commission free trading and overall low transaction costs.

A stock trade will cost anywhere from $5 to $30 for an online stock broker and typically up to $150 per trade for a full service broker. Futures brokers generally charge between $10 and $30 round turn, this means you pay between $10 and $30 to enter and exit every trade. Most forex brokers offer little or no transaction fees, they are compensated through the bid/ask spread of each currency pair. Typically these spreads are as little as 1.5 to 5 pips, depending on the broker and currency being traded. So essentially the only fee associated with a forex trade is that you start out being a few pips negative on every trade due to the bid/ask spread.

4. Market transparency and Instant execution.

Market transparency is much greater in forex than in stocks or commodities, this means it is easier to analyze the inner workings of the market and figure out what is driving it. For example, economic reports and news announcements that drive a country’s economic policy are widely available and accessible for anyone interested. Whereas an individual company’s accounting statements are much harder if not impossible to obtain. Instantaneous order execution is another great advantage forex has over other markets. Retail forex trading is generally done over the internet on all electronic platforms. The forex market has no central exchange, no open-out cry pits, no floor brokers, and was designed to be this way to facilitate large banks and allow for instant execution of transactions, this means no delays for you and extreme ease of execution.

5. Low margin requirements.

Forex margin requirements were recently raised in the U.S. but at a maximum of 1:100 this is still much higher leverage than you will get in the futures or equity markets. This means you can control 100,000 worth of currency for only 1,000, or 1%. To compare, in the futures markets traders must post margin equal to between 5%-8% of the contract value while stock traders typically must post at least 50% margin. Leverage can be a double-edge sword however, as an increase in leverage leads to an increase in risk but also in profit potential.

6. Price movements are highly predictable in the forex market.

Due to its highly speculative nature forex price movements tend to over shoot and then correct back to the mean. This means there are a number of repetitive patterns that are easily recognizable to the trader who is trained in price action analysis. Forex currency pairs generally spend more time in very strong up or down trends than other markets, this is also a huge advantage because it is generally much easier to trade a strongly trending market than a chaotic and consolidating market.

7. Equal opportunity to profit in rising or falling markets.

The forex market has no structural bias as do most stock markets. For example, most stock markets have a bullish bias, this means traders tend to like the long side or upside of the market more and as a result of this it is actually more difficult and generally requires more margin to sell short in a stock market. This is not the case in the forex market. As an inherent feature of the structure of the forex market it is equally easy to buy or sell at anytime and there is never any increased fee for selling short. In fact, each time you buy a currency you are simultaneously selling another, and vice versa. The ability to buy or sell at any time with no penalties is another advantage the forex trader has over those trading other markets.

8. No constraints on the number or type of transactions.

The futures market sometimes will have what is called a “limit up” or a “limit down” day, this means when the price moves beyond a pre-determined daily level traders are restricted from entering new positions and are only allowed to exit existing positions if they desire to do so. This is meant to control volatility, but because the futures market for currencies follows the spot forex market the next day at the futures open their sometimes will be large “gaps” or areas where the price has adjusted over night to match the current spot forex price. Now, if you were holding a futures position over night it is entirely possible that your stop got gapped around, in which case you would get filled at the next best price, which often will be extremely damaging to your trading account. Due to the 24 hour nature of the spot forex market even in extreme market volatility traders generally don’t have to worry about gaps and can almost always get out at the exact price they want.

9. Mini and micro accounts make it easy to get started.

There are many forex brokers that are easily accessible on the internet. Unlike futures or stock markets it is not going to benefit you much if at all to have a full service broker in forex. Most of the bigger forex brokers all offer tight spreads and very similar price feeds, they also all offer demo accounts that let you test out your trading ideas before risking real money. Another great thing about the forex market is that you can get started with as little as $250. Micro accounts allow you to trade position sizes as small as 1 cent per 1 pip movement. This means you can effectively control your risk even if you are not starting with much money. In the futures or stock market not starting with at least $10,000 is a big factor in why people lose so often.

10. Forex price movement lends itself wonderfully to price action setups.

Due to the speculative and contrarian nature of the Forex market prices tend to continue in one direction for a decent move and then revert back to the mean or value-area. More often than not these big moves are tipped off with a price action signal. If you are trained by a professional trader in the art of price action analysis you can design an entire trading plan around a few simple yet effective price action setups. Some of these patterns re-occur on a regular basis on the 4 hour and daily charts and can be extremely accurate. Due to the inherent high volume and large price movements, Forex is the best market to trade using price action analysis.

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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 20,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.
  1. Dmitriy September 16, 2019 at 1:57 pm

    Thanks a lot, Nial!
    That was a truly beautiful lesson!

    Reply
  2. Sunday September 14, 2019 at 9:53 pm

    what to know more about risk management
    if I want to risk 1$ on a pair what will be my lot size and pip value to set as a Stop loss

    Reply
  3. Zinnur June 2, 2019 at 4:34 am

    Important lesson. Thanks

    Reply
  4. Благодарность October 30, 2018 at 3:47 am

    Magnificent article

    Reply
  5. Rahmat February 26, 2018 at 7:36 pm

    Almost every articles content and language from Nial are really giving positive effects including this one.
    So thank you Nial.

    Reply
  6. Olawa February 18, 2018 at 1:01 am

    Nial is my preferred Forex mentor anyday

    Reply
  7. DERRICK February 16, 2018 at 12:54 am

    all i can say is thank you so much

    Reply
  8. Tha Mathabzo Zulu February 15, 2018 at 8:15 pm

    Thank Nial

    Reply
  9. Duncan February 15, 2018 at 6:29 pm

    Thanks Nial;

    This was a great post which actually helped me rephrase my thoughts after my losses.

    I am still not very profitable at this stage but every time I lose, I look back to see what I could have done better and learn to minimize my losses maybe exit at a small profit rather than a loss!!

    However; after having read this, I also now appreciate the fact that losses are a part of it as well and I feel less discouraged before taking the next trade than before. Things sometimes are easier said than done – true – but after reading these guidelines, I learn a lot and appreciate it heaps. I am learning a lot and the best part of it is that I am enjoying it.

    Thanks for spending the time to post such valuable guidance!

    Duncan

    Reply
  10. Peter Miller February 15, 2018 at 2:46 pm

    Another good lesson. As they say ” life is what you make it “and that goes for trading also, think before you act and know that never one day (or life is ) is the same as the last one, so treat as Nial says each trade as a new beginning. Thanks .

    Reply
  11. rudra February 15, 2018 at 6:24 am

    good one sir

    Reply
  12. Khesiwe February 15, 2018 at 2:14 am

    Excellent article pactice makes perfect I’m going to practice every advice in this article thanks Nial

    Reply
  13. Winston Roy Longbottom February 15, 2018 at 12:01 am

    Thanks Nial, I for one admit that I was influenced by previous success and could not see the next trade through that; I was brought back to reality with some quick losses, however I puuled my thoughts together and looked at my next trade with confidence and considered every possible angle before taking it and I am now back on track. This article has since reassured me of that fact and I must disregard any previous trade before attempting the next. Your articles help keep sanity in the trading game and also leads to further success. Many Thanks. Winston

    Reply
  14. farzad February 14, 2018 at 8:50 pm

    Every word in this article is like gold…

    Thanks AGAIN Nial.

    Reply
  15. Olamide February 14, 2018 at 2:03 am

    Thanks Nial. That’s reminds me of a trade some years ago before I quit trading. I bought EUR/USD on $0.05 lots with $20 risk and i made a profit of $183 on that trade so that winning recency bias got into my head and I felt overconfident, then i went ahead to trade $0.10 lots on my next two trades and I lost both. That’s how I gave back the profit I made from that EUR/USD to the market. Fear start to catch me then I reduce my lots to $0.01 which definitely reduced my profit that I would have make on some trade. Though I just came back to the market since two or three years ago that I quit but am still using demo account to test my trading strategies before trying to come back live. Thanks once more.

    Reply
  16. Wandera Moses February 13, 2018 at 8:50 pm

    Nial thx for this one also. i have improved alot in trading just by reading your articles. thx alot

    Reply
  17. ampurirag February 13, 2018 at 6:09 pm

    Excellent and timely. Thanks Nial.

    Reply
  18. Seiso February 13, 2018 at 1:44 pm

    Typical of Nial’s mail’s. I am not in anyway surprised to find this post hitting the nail on the head as it does and so timely as well. I always find Nial’s post as informing, factual and educating like this one. Thanks to Nial, from now I am no longer going to be enslaved to my last trade’s results.

    Reply
  19. Colin February 13, 2018 at 10:31 am

    Thanks for the trading insight. Particularly about training our brains to behave properly.

    Reply
  20. Hettie van der Vyver February 13, 2018 at 5:12 am

    this makes sense!!

    Reply
  21. Thoko February 13, 2018 at 5:09 am

    Well I am a true novice,I have not started trading yet. If I understand well briefly you say if one is a trader one must bury the past.That is my motto
    So I feel l Iam going to do well.

    Reply
  22. Wasantha February 13, 2018 at 4:45 am

    This article explains what happened when I first started trading forex. After reading many of Nial,s writings on the subject of trading I feel that I am expanded in my knowledge and confident about my trading decisions.I really appreciate Nial,s works,

    Reply
  23. kris February 13, 2018 at 2:59 am

    i noticed today after one loosing trade that it can’t reflect, the other running trades .
    After that i checked my emails and i saw your email as first .I have read it and then it was like you would heard what i sayd before It was simmilar to :

    If you just lost, it has no bearing on the fact that your next trade might be a winner.
    If you just won, it has no bearing on the fact that your next trade might be a loser.

    thank you for your work .
    traders mindset ..

    have a nice day.

    Reply

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