- PPF Points
- 2,039
Forex trading is often preferred over gold trading due to the fact that it provides more freedom to a trader, gives higher liquidity, and in return, offers a wider spectrum of opportunities to different trading styles. One of the top benefits of the forex industry is that it gives you access to dozens of currency pairs that are available for your choice, and you are not limited to just one asset such as gold. You can change major pairs to minors, or to even exotic currencies based on the trend and where the most promising trades are. Furthermore, forex trading usually features narrower spreads and lower transaction fees, especially with the highly traded pairs such as EUR/USD and USD/JPY. This means that you can place your trades and execute them without the charges being too high, that is if there are any. Conversely, a trade that involves gold often encounters a much wider spread and due to emotional market reactions and behaves accordingly. In other words, it may have wider volatility and unpredictably rise, and then reverse the movement because of things that like geopolitical fear, inflation panic, or global uncertainty—reasons being they lead to unsystematic spikes and reversals. No doubt that this will attract some traders; however, it also entails more risk, particularly to those who are just starting the trade. For example, if we compare the gold market to the forex one; the forex market operates all day, five days a week, and the trader can fit the trading any time of his choosing which he finds convenient. More so, the forex market is full of liquid, a line is drawn for the lamp and it is easier to conduct large trades without the price being greatly affected. As if that is not enough, the markets are constantly being affected by the economic policies, the reports, and the decisions made by the central banks which can either cause the value of a given currency to appreciate or depreciate. That is, there is plenty of opportunities in the forex market. In a word, foreign exchange offers more tools, more workable trends, and more personal authority if compared to trading gold which is single in nature and emotion-based too.
