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Stocks vs Forex

Discussion in 'Forex Discussions' started by painofhell, Dec 27, 2015.

  1. painofhell

    painofhell Content Contributor

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    The foreign exchange market might seem very similar to other financial markets to some people. On the surface, the forex exchange has many similarities to the stock exchange. However, there are a number of differences. Below is a breakdown of some of the major differences that might not be obvious to everyone.

    The Marketplace
    The stock market is a centralized market, meaning that it is located mainly in one place: the New York Stock Exchange (NYSE). All trades enter and exit from that location. Forex is not centralized, and is considered an over-the-counter (or OTC) exchange.

    Trading Hours
    The stock market is operated on a strict schedule. So is the forex market. However, the stock market operates for 8 hours per day and then shuts down. Traders have to wait until the next morning to start trading again. There is no downtime in the forex market. It’s operated 24 hours a day in 3 shifts, 365 days a year. The forex trading hours in the U.S., Asian and European markets overlap, so trading at any time of the day or night is seamless.

    Fees
    Since the forex market isn’t centralized, a trader can buy or sell directly by spot trading. The stock market always has a middleman, and that means more fees. Every time a stock is bought or sold, there is a broker or other entity standing between buyer and seller making money for just being there. Of course, forex brokers exist, but the spreads are transparent and most brokers don’t charge a commission or tack on additional transaction fees.

    Complexity
    Although there is a good deal of formulation and study to forex market analysis, it really boils down to following just 4 major currency pairs, compared to trying to follow any number of over 8,000 stocks in the stock market. Traders also make use of forex systems to help determine the best time to buy or sell a given currency, simplifying the trading process.

    Speed
    Under normal market conditions, forex trades are instantaneous, thanks to programs that automatically execute on a forex trading signal. There is little chance of missing a trade because of execution time. In the stock market, your order is passed to the trading floor, where it can take several minutes to make the trade.
     
  2. Sharon Higgins

    Sharon Higgins New Member

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    Forex trading is definitely the best business in the world, it is obvious that most people compare it to stock exchange due to the similarities, but otherwise, it has many differences which we need to look at. Firstly Forex is an active market, it is on for 24 hours throughout the working week, it only gets closed on Sat/Sun (Weekends), and so we can work easily without worrying over much. Now if one wants to do Stock trading then it’s 8 hours only, so we have to leave everything from our schedule and work in those hours, but with Forex, we can play on our own tune and with quality broker like OctaFX, it helps much more given the quality of their service.
     
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