5 Benefits of the Foreign Exchange Market Over the Stock Market


Foreign exchange trading has evolved tremendously in recent years. What started as a way for people to gain foreign currency to travel has morphed into its own investment strategy. Like stock traders, foreign exchange traders invest to capitalize on profitable opportunities. These gains are made via the fluctuating currency values between countries. Today, the foreign exchange market is the world’s most significant and continues to grow.

In fact, the global foreign-exchange market leaped to an all-time high in April 2022. Daily transactions hit a staggering $7 trillion! That’s a 14% increase from April 2019. Most people are taught the stock market is the best investment vehicle… but is it? Is there a better alternative? Here are 5 benefits of the foreign exchange market over the stock market.

1. The World’s Largest and Most Accessible Market

The foreign exchange market moves trillions of dollars daily (in contrast, only $25 billion of volume is traded daily on the NYSE—New York Stock Exchange). Moreover, the barrier to entry is low, making it easily accessible. These facts allow you to feel confident about your investment. Also, you’ll be investing among prominent institutions led by teams of experts. And because of its enormity, it’s much less likely that any institution will influence the movement of any currencies.

2. Currencies are Stock Market Independent

With its currency trades, the foreign exchange market operates independently of the stock market. As a result, stock market volatility typically doesn’t affect international currency exchange oscillations. So, the foreign exchange market is untouched by whether the stock market rises or falls.

3. More Stable and Predictable Returns

Moderate activities in currency pairs can result in considerable returns compared to stocks. A fluctuation in a currency pair of only 2% can lead to thousands of dollars in profit. Unanticipated events can significantly impact a particular stock or occupational profession; a suitable example is the trade battle between China and the United States.

4. Backed by Governments and Financial Institutions

This benefit ensures you’ll have a secure investment. A more considerable degree of legality and stability is afforded to your asset. When you purchase currency pairs, you are directly purchasing money and supporting the full backing of the country it belongs to. CWS Capital trades only the major exchanged currency pairs in G20 countries: the US, the UK, European Union, Japan, Canada, Australia, Switzerland, and New Zealand.

5. Over 80% of Transactions are Connected to U.S. Currency Pairs

The US Dollar is still the world’s predominant currency; the country is still the largest and most robust economy in the world. As such, the dollar remains the overriding global reserve currency. US Dollars are the exchange medium for numerous central cross-border transactions. Also, the US is the world’s most extensive and liquid economic market.

Which Investment Medium is the Best Option?

Enough time has passed with foreign exchange to validate its sustainability. But that doesn’t mean it’s the appropriate investment medium for everyone. Whether you should invest in it depends mainly on your goals, current financial standing, and experience. However, if you want to learn if foreign exchange investing is right for you, see if you qualify by contacting us today: invest@cwscapitalfx.com.