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Comparing FOREX and Stock MarketsThe Foreign exchange [FOREX] market was established in the early 1970's to faciliate the trading of foreign currencies between markets. FOREX trading varies considerably from stock trading. Stocks vs. CurrencyA primary difference between the forex market and the stock market is that the FOREX market is no based on any one business or investing in any one business, but instead on specific currencies. Value Traded DailyThe forex market is vast and highly specialized. There is almost two trillion dollars traded daily on the FOREX market. This is signficantly more than the value of stocks traded in any given day, in any country. LiquidityUnits traded on the forex market are much more readily liquidated [coverted back to cash] than stocks. Geographic SpreadThe forex market is global, worldwide, whereas the stock market takes place only within a single country - albeit stocks in any country can be purchased from another country, but each stock exchange is geographically bound to a particular region. The forex market involves governments, banks, financial institutions and those similar types of institutions from other countries. Trading HoursThe stock market has set trading hours, similar to business hours and is closed on banking holidays and weekends. The forex market is open twenty four hours a day due to the global nature of the market. A FOREX trading market will be open in some country, at any hour of the day due to the multiple time zones. As one market is opening, another countries market is closing. This is the continual method of how the forex market trading occurs. Base CurrencyThe base currency of a stock market in a particular country will be the currency of that country. That is, the trade must be settled in the base currency. For example buying stocks on the Japanese stock market must be settled in the Japanese yen, and buying stocks on the United States stock market must be settled on the US dollar. In the FOREX market, many types of countries, and many currencies are involved at any instance. You can faciliate, trade and settle in any currency. These are the major differences between the stock market and the forex market.
NEXT: FOREX Trading Scams and Fraud
Forex Index | About FOREX | Comparison Forex & Stock Markets | Scams & Fraud | |
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