FOREX vs. STOCKS

Comparison of Forex Market with Stock Market

Thousands of stocks are listed in Major stock exchanges. The majority of forex traders trade the four major pairs of currencies although in spot market dozens of currency pairs are available. To study about four currency pairs is comparatively easy than studying about thousands of stocks.

 

Market Time

The forex market timing is day and night / 24 hours. Traders can do it in Asian, European and U.S. market hours, customizing theirs own schedule. From Sunday 4:00 pm EST to Friday 4:00 pm EST, most of brokers provides platform active, with customer service. Some Gulf based brokers are active during week end, even though, it is a very low volume period.

 

Broker Commission

Majority of brokers charge no commission or additional transactions costs to trade currencies offline or online. Some of them have withdrawal fee and charges. Forex trading costs are less than other markets. Forex brokers are compensated through the bid-ask spread, for their services.

 

Orders Execution

Orders are executed instantly with live streaming prices in normal conditions, except under unusual market volatility state. Most of brokers guarantee only for entry, stop and limit orders under normal market conditions.

 

Trading Limitations

In forex trading, always buying one currency and selling another one in the pair, and of having equal chance to trade in an uptrend, flat or downtrend market.

There is no restriction to short in the currency market, but the equity market has some restrictions on short selling (means selling without holding position planning to buy on declining) in certain conditions.

 

Mediators

Centralised exchanges are of having some merits to the trader. However, there can be a middleman situated between the trader and buyer/seller of the financial instrument and cost them charges, in fees or in time.

Spot currency trading, is decentralized, with varying quotes with different currency dealers giving quicker access and cheaper costs to forex traders. Dealers competition is high that almost always assure the traders best deals. Ask-Bid spread is not constant for all currency pairs and change with market time.

 

Market Controlling

Stock market can be influenced by very high volume buying or selling.

Liquidity in forex arena is very high. Retail currency conversion houses, banks, governments, hedging fund houses, and large net worth individuals are just spot currency market participants. In spot trading, due to the liquidity, it is not easy to control the market intentionally for a period of time.

 

Influences

Brokerage firms and analysts with good coverage may give advises to accumulate or to supply a particular stock which may affect its market price as they wish in some cases.

But foreign exchange market analysts have very little effect on exchange rates. As the prime market, foreign exchange, generates billions in revenue for the world’s banks and has a role in global markets.

WHAT IS MEANT BY SPOOFING AND INSIDER TRADING ?

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