We have all come across terms like the NYSE and the BSE once in our lifetimes. But while the global forex market is a different ball game altogether, not everyone is aware of the key differences between the stock market and the forex market; thus in this article we will discuss about the top differences between both the markets, that you need to be aware of.
The Forex vs. Stocks
When making the initial choice of which market to choose, traders often get confused between what is more convenient for them or in other terms, which market is easier for them to make profits in. But one point that traders don’t realize is the fact that the Forex market and the Stock are two entirely different things and the forex market has some unique advantages, which the stock market does not share.
When choosing between markets, knowing the similarities and differences will help you keep yourself and also make more informed decisions. Thus mentioned below are the top differences between the stock and the Forex markets.
The first and most important difference between the forex and the stock market is sheer volume. On an average, the Forex market generates a revenue of more than 5 trillion USD a day, while all the stock markets combined across the globe, only account for 200 billion USD per day. The sheer increase in volume is due to the time zones, which keeps the Forex Market open, 24 hours a day.
Having such a volume is advantageous to traders in a variety of ways. First, is the liquidity, which being high means that traders can get trades closer to the price they want and also they can enter and exit the market more conveniently.
As mentioned in the previous point, a higher volume means more liquidity. This increased liquidity means that the spreads are extremely tight and traders need to pay less commission fee. Also they can get to their trades faster and thus exit and enter market conveniently at all times.
The Forex Market is one single integrated entity, which operates across hundreds of continents, each having their own time zones. This means that the market is open 24 hours a day, all 5 business days a week.
This allows trades, to trade throughout the day and make substantial profits at all times,
Most forex brokers around the world, don’t charge a commission at all or charges are very minimal. What they do is charge on the spreads, which are very tight, due to the sheer volume, all of which adds up to more profit for the traders.
The global forex market is a tough game and not everyone succeeds. But with knowledge comes power and thus keep checking Theliquidity for all the latest information, news, tips and tricks.
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