Finance

Key difference between stock and Forex trading industry

Forex and stock trading are two of the most traded financial market in the world. Forex market is the largest financial market with over 4-6 trillion dollars trading hands each day. The stock market comes in second with over 20 billion dollars on average. Now people are mostly accustomed to the stock market than the Forex market. So, they consider the stock market the most liquid market though this conception is wrong.

Forex and stock market, both have increased possibilities for the traders. So many new traders often get confused to choose the right trading platform. As a trader, one should choose a trading platform that matches well with his trading type and the amount of time he can manage to invest as well as the capital amount. So here are some useful tips for those traders who are feeling uneasy to choose between the stock market and trading market.

Trading time

In Forex trading, one enjoys trading 24 hours a day except for the weekends. As a result, a trader can even trade while being on a vacation. This is a facility that the stock market trader in the United Kingdom doesn’t enjoy. Stock market traders have to trade within the business hours within a day. The hours in the stock market are much more limited.

Regulation

This is one of the most distinct differences between Forex and stock markets. Stock markets are generally regulated by the S4ecurities and Exchanges whereas Forex trading is regulated under government supervision. In Forex trading, various government factors play important roles in making price changes. The main objective of this regulatory organization is to look after and protect the traders’ trading rights from scams. To avoid regulations related problem, visit Saxo and use their advanced platform from the start.

Leverage

The leverage amount varies in these two trading systems. In Forex trading, the leverage provided by the brokers is comparatively more than that of the stock market. That means Forex traders get to invest with more leverage than the stock market traders. In the stock market, the ratio of leverage provided is 2:1 while currency traders can operate with up to 50:1 leverage.

Volatility

The volatility of the stock markets is much more compared to the volatility of currency trading. In the Forex market, the currency values tend to stay much stable concerning another currency. However, this stability is often interrupted due to the extreme volatility of the stock markets.

Trading platform

Currency traders and stock market traders, both enjoy the facility of trading online even though the currency traders are often more privileged to do all their trading works online. Stock market traders often rely on central exchanges with physical locations thus making it partially an online platform to offer transactions.

Investment

$100 in their trading account. However, it is not the same case for the stock market traders. They need to possess a certain amount of capital in their accounts to prove that they are eligible to continue trades in this market.

Similarities between the two markets

Apart from their distinct dissimilarities, these two markets have some common aspects. The most common characteristic between them is, both types of traders enjoy short term price shifts in prices to earn profits. And both the trading medium depends highly on technical analysis. No matter what type of trading it may be, it requires a trader to know about the market beforehand to earn a profit. Without good market research, there is a high potential that a trader can lose a winning trade. So, it is a very important characteristic of both the markets to practice and understand how the market works to make profits.

Now as a trader, you might find it hard to choose between the two markets. That is why your first and foremost priority before determining your chosen trading medium is to determine your capital and the time you are ready to give. Find out which trading medium fits the best for you. You should know that even though currency trading has more facilities, it needs more regulation and monitoring thus making it riskier to trade. That’s why always think twice before you choose between these two.

admin
the authoradmin

Leave a Reply