Forex trading is an increasingly popular trading option for new traders due in part to the heavy promotion of Forex trading courses. After all and as many Forex trading course advertisements will point out, Forex trading has low capital requirements, is relatively easy to do, comes with fairly low trading commissions, involves low margin requirements and trading can be done 24 hours a day.

However, we believe that if you take a comprehensive stock trading course, you will probably think twice before doing any type of Forex trading for the following reasons:

Facts About Forex Trading

Forex trading is largely unregulated. For starters, a good stock trading course will point out that Forex trading is often done on unregulated Forex exchanges or through brokers and banks. On the other hand, currency futures and Forex futures will be traded on regulated exchanges while futures themselves are subject to far more regulations than Forex.

Forex trading is subject to a large number of scams. In addition, a good stock trading course will note that Forex trading, due to being less tightly regulated, has been the subject of a number of scams – from brokers who are less than honest to Forex trading products such as robotic trading software that promises outrageous profits. On the other hand, stock and options trading has been the subject of much fewer scams due to better regulations.

Forex trading accounts are not covered by depositor insurance. A good stock trading course will also point out that Forex trading accounts themselves are not subject to any form of protection. On the other hand, a stock or futures account will be completely protected against any broker or bank failure.

Forex trading is not particularly transparent. Moreover, a good stock trading course will note that Forex trading is not particularly transparent. On the other hand and with stock and options trading, there is 100% transparency as all parties involved will see the same prices at the exact same time.

Forex trading has higher spreads. A good stock trading course will explain how Forex trading comes with higher spreads – specifically 3 ticks. In other words, it’s less than accurate to claim that Forex trading is commission free when it comes with higher spreads. On the other hand, liquid options trading contracts will usually come with a spread of just 1 tick.

Forex trading does not exactly come with guaranteed fills. Finally, a good stock trading course will explain that the only way to guarantee fills is for the Forex dealer to be the buyer and seller of last resort. And if the Forex dealer does not have a dealer desk, then a bank is the buyer and seller of last resort but banks are also unregulated when it comes to Forex trading. On the other hand and with other types of trading, the exchange will be the buyer and seller of last resort.

Forex Trading Bottom Line

The bottom line: Take a comprehensive stock trading course that covers both stocks and options and stay clear of any type of Forex trading course that makes outrageous promises.