If you are one of those who are comparing Forex and Stock, and wondering which market is the best place to trade, this article is for you. Although Forex and Stock are interconnected, they are different in a vast number of ways. The Forex market is the most attractive one to trade in, and it has unique characteristics too. If you want to chose between trading Forex or stock, then, what will help make the right decision is your trading style. But you will make informed trading decisions if you know the Difference between Forex and stock .
You should already know by now that the biggest difference between Forex and stock is the size of the forex market. It’s trading volumes can be used to your advantage as a trader. This means you will be able to get your orders executed easily. And it’s most likely your orders will be executed close to the price that you want. Thus, liquidity is your best ally which is why you might want to choose the Forex market over the stock market.
It’s already been mention above that the Forex market has large trading volumes and this can be attributed to it’s high liquidity. Forex has high liquidity which encourages lower transaction fees, and tighter spreads. If you compare this margin with the stock market, you’ll see that the forex market has a major advantage over the stock market.
24 hours market
Forex isn’t transacted over a traditional exchange which means it’s not an over the counter exchange market. Interbank markets is what facilitates Forex trading. Which means it doesn’t matter which country you are, trading happens around the clock, matching your business and trading hours. Being a trader, you have access to the Forex market for 24 hours a day, 5 days a week, and it keeps going.
Minimal or no commission
A lot of forex brokers typically charges no commission, instead make their margin on the spread. With stock, you have to pay a commission along with the spread to a broker. The trading spread of forex is transparent as compared to that of the stock market
Narrow Vs Wide Focus
The Forex market has majorly 8 currencies that traders are supposed to focus on, the stock market has a thousand currencies. The 8 economies available to traders for trading are done in pairs. Making traders look out for converging and diverging trends to match up and trade. Convincingly 8 pairs of currencies are easy to keep an eye on than thousands. Again, economic calendars will help you make better trading decisions.
The answers you are looking for is largely dependent on your trading styles. It could be scalping, medium term or long term. You should choose based on your trading preferences.