Is it blue chip or Forex arbitrage trading?

Active traders and investors have access to several trading tools nowadays, starting from the ever reliable blue chips to industrials, to hectic-paced futures to foreign currency market of Forex. So it becomes difficult to decide which instrument to wield as there are several reasons that a player has to mull over before jumping in to the market. Trading style and risk tolerance of an investor or trader is the vital element in the game.  By example the buy and hold strategy is more suitable for trading in the stock market where as the short term players may prefer the highly volatile markets. Let us decide whether it is lucrative to open Forex trading account or trading in blue chips.

Forex trading being the biggest financial market in the world accounts for more than $4 trillion per day of trading value. This was quoted according to a 2011 analysis. Forex attracts more players due to its high liquidity, amount of leverage and the round the clock trading across the world which is advantageous to the trading parties. On the other hand Blue chips are stocks bought from financially sound and well established companies. Even under stressful economical conditions these stocks are known to be able to generate profit and historically effective in paying dividends. However being less volatile they are termed to be steady for the portfolios of investors.

The phenomenon of short term price fluctuation is known as volatility. People who prefer short term such as the day traders would rely on this factor to earn quick profit which materialize from the market swings where as some prefer the less volatile environment and investments with less risk. So several short-term players go for the Forex market, where as the ones that prefer stability opt for the assurance of blue chips. Leverage is another factor that attracts customers to the Forex trading. Investors in the USA generally have 2:1 leverage for accessing stocks. But with the Forex market traders have increased level of leverage of 50:1 and even higher leverage is available in other parts of the world. Whether leverage is good for trading is another question, however this can build greater equity from a small investment.

Forex arbitrage trading is risk-free strategy and it permits forex traders operating retail to generate profit with no open currency exposure. This enables the traders to act fast when opportunities are presented in the market owing to price inefficiency.