Forex market
The marketplace where buying and selling currencies occur is called the Forex market: international banks, individual traders, and tourists traveling from one country to another participant in this exchange. The exchange rate determines the buying and selling of currencies. For example, it takes 1.21 U.S. dollars to buy one Euro. On daily basis, trade of $6.6trillions takes place in the Forex market.
Stock market
In the Stock market, you buy a firm or any corporation stock. Actually, you are buying the ownership of that company. The trade volume of the Stock market on daily basis is $200trillions which is far less than the Forex market.
In this article, we are going to make a comparison between Forex and the Stock market.
Forex vs. Stock market
- Trading price fluctuations
In the FX market, economic factors like interest rates, inflation, GDP, and current account deficit affect currency prices. While in the Stock market, a company’s financial status, income, and growth rates affect the fluctuation of currency prices. So, an investor should do research on these factors to invest money in any of these two markets.
- Liquidity of trades
The ease of finding buyers and sellers in the market is called liquidity. The fx market is the biggest and the most liquid financial market. You can convert currency in bulk at the same time. At the same time, the stock market has less volume of trade per day. But, still it is liquid. Smaller shares cause problems for investors.
- Role of leverage
Leverage is the amount of loan given to an investor to generate great profit from a small investment. Both markets including Forex and Stock trading, offer leverage. But the Forex market gives you more loans than the Stock exchange. Whether you choose FX or stock, this is an alarming factor of risk.
- Working duration
The stock market opens from 9:30 am to 4 pm regularly. This schedule is followed from Monday to Friday. On the other hand, the Forex market continues for 24 hours from Sunday to Friday night. You can trade at any time during these days.
- Volatility of prices
The fluctuation in currency rates is called volatility. Forex trade is highly volatile because it takes place all over the world. A slight price change can make a hugely significant impact on your profit. The stock market does not fluctuate quickly, except during harsh situations of political imbalance and economic losses. Here is list of top forex brokers.
Fx is better than Stock Exchange?
Forex trading is better than Stock trading in the following aspects.
Ø It remains open for 24 hours in contrast to stock which works from 9:30 am to 4 pm.
Ø Brokers do not get any extra commission.
Ø FX trade volume is $6.6trillions while it is only a fraction for Stock.
Ø There are equal opportunities for trade whether the trader is short or long.
Ø Experts and trading firms do not influence the FX market.
Conclusion
This article covers the differences between Forex market and the Stock market. From analyzing these points, we become able to decide which market we should invest in? In the end, we discussed why Forex is better than the Stock exchange?
