Equities Forex Education

Difference Between Stock and Forex Trading

Delving deep into the sometimes confusing and always fast paced environment of the stock exchange and investing can be a little confronting at times. When to get in, how much to trade and when to take out your stock and shares in a company can lead people to consult a stock broker. Things get even more confusing when you consider going foreign or local stock market, forex is the acronym for Foreign Exchange market which is widely considered the most lucrative market in the world.

Just in case you didn’t know:

Fast fact: Foreign Exchange (forex) refers to the foreign exchange market. It is the over-the-counter market in which the foreign currencies of the world are traded. It is considered the largest and most liquid market in the world.

Fast fact: Stock Trader is an investor in the financial-markets. Stock or equity traders can either be partake in the practice casually or as a full-time profession. Those working at the institutional-level are moreso employed by hedge funds, mutual funds, portfolio-managers or pension funds.

So what is the real difference between stock trading and forex trading? While there are plenty of small, somewhat insignificant comparisons, below is a list of differences that you should consider when going either stock or forex.

* Forex is 24/7, whilst the stock market closes everyday at the same time and reopens again the following morning, forex continues to trade and hence continues to gain momentum when the stock market is closed. It also means that you are not restricted to the market allocated to your time zone. Want to look at the stock market in China or how about Brazil? Whether you call Sydney, New York or London home you will not be restricted by time

* Avoid high commission. Unfortunately, a lot of stock brokers gain commissions purely through your stock. So you’ll find perhaps their interests lay in what will eventually benefit them more than you. So if you’re looking to find a broker that charges less and is available to assist you either online or over the phone, you’re better off looking for a forex broker

* Short selling with currency. If you’re trading on the traditional stock market chances are you will not be able to trade currencies in a falling market, however, this isn’t the case with the Forex market you have the ability to buy and trade multiple currencies regardless of whether it is a falling or rising market

* Easier to negotiate for beginners. On the stock market at any one time, there can be thousands upon thousands of stock to pick from, some have recognizable names whilst others you’ve never even heard of. This means it can be a little tricky to decide which one will suit you, but with the forex there is more a tailored selection of stock so you’ll have less to chose from but usually a better selection.

* Spot trading vs centralized exchanges is one of the biggest differences between Forex trading and stock trading. Whilst stock trading involves multiple middleman e.g. trader, buyer, seller and security, forex has on the spot trading which essentially means the trade or exchange is done quickly and efficiently at usually a cheaper cost to you.

* Exclusive entities and firms have less of a pull on the forex. You’ll constantly be told that the stock market is run by a few select firms and companies that hire hundreds of brokers to make them commission, forex, on the other hand, is full of people just like you with the help of some great brokers.

In conclusion, if you’re looking to start trading or buying stock and you’re not entirely sure how to start out, the forex market has to be considered! If not for the simple fact it’s easier and more user-friendly compared to the traditional stock market but also because it gives you exclusive access to stocks and opportunities that your local stock market couldn’t even dream of giving you. Of course, always evaluate and think about all your options before investing your time and money but if you do decide to take on the forex just remember you’ll be getting commissioned at a lower rate and the brokers are available 24/7 for your convenience. What’s not to love?

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