Foreign Exchange Vs Stocks
Trading with both stocks and foreign exchange generally involve risk. Foreign exchange does not have any regulated exchange and as a result, there are additional risks associated with forex trading. Stocks are basically viewed as an investment, however, recent volatility and instability has led to stock trading taking on a more speculative role. There are many things that distinguish forex trading from stock trading. The following article reveals information on foreign exchange vs stocks. So, read on to know the difference between foreign exchange and stocks trading.
Some of the few points that distinguish foreign exchange trading from stock trading are given below:
24 hour marketForeign exchange market operates 24 hour a day but stock exchange market is not a 24 hour market. The flexibility in trade timing enables forex traders to trade in their own time. It is also beneficial for those traders who want to trade forex as a pert time process. On the other hand stock exchange traders have limited time to trade in stocks. This is one of the major differences between foreign exchange and stocks.
Commission freeAlmost all the forex broker charges no commission for trading. Combined with the tight, consistent, and fully transparent spread, foreign exchange trading costs are much lower as compare to stock trading.
LeverageMoving ahead with the information on stocks vs foreign exchange, we came to know that in foreign exchange market the ability to trade on margin gives forex traders a great leverage as compare to stock market. The huge leverage offered by forex market enables forex trader to gain extraordinary profits from their trades.
Liquidity and execution timeComparing foreign exchange and stocks, we also came to know that, when you trade in the foreign exchange market you are trading in case. Stocks on the other hand require an active seller of a particular stock. In forex trading your trades are instantly executed under normal market conditions but this does not happen in stock trading. However, this distinguishes stocks from forex trading.
Few major currencies to follow vs thousands of stocksWhen you are trading forex, you only have to follow some few major currencies. But stock market has thousands of stocks to trade. Following them would be a very difficult task. With forex trading you can concentrate on the major currencies.
No bear marketWhen trading in the foreign exchange market, you can predict the currencies going up and down. While stocks on the other hand can experience long bear markets seemingly everything is going down. This also however, distinguishes stocks from forex trading.
Get familiar with the difference between foreign exchange and stocks and increase your knowledge in the world of trading.