The stock market and the forex market are the two most popular and most traded financial markets. Although there are many similarities among them, that’s the story of another day. Today we will discuss the key difference between stock trading and forex trading!
The comparison table of key difference between stock trading and forex trading
| Stock Trading | Forex trading |
| Too many stocks | Trade only seven major pairs |
| low liquidity in the stock market | High liquidity in the forex |
| High manipulated stock market | Manipulation less forex market |
| Exchange houses’ opening hours in the stock market | 24 hours open forex market |
| Commission in stock market | No commission in foreign currencies |
| Go only long position in stock trading | Go long or short both positions in forex trading |
| you won’t get many free resources and trading strategies made based on the stock market. | Too many strategies and free resources available |
| here you don’t need to concern about many market influencers | There are too many market influencers in the forex market. |
Too many stocks vs. forex trades with only major pairs
Although there are exotic and minor currency pairs in forex, most of the swing traders, position traders, and scalper trade only major pairs, that’s why individual investors only have to focus on the US dollar and some other major country’s currency. Whereas if you are a stock trader, then you need to focus on too many stocks. Approximately 2800 stocks are listed on the new york stock exchange. Just think how many stock exchange houses there are in the world.
So if you choose forex over the stock, then you will be able to lead a stress-free trading style career. Thus chance is higher here to make a profit.
High liquidity in forex vs. low liquidity in stock market
The forex market is huge. Statistics show that on average daily turnover of the forex market is more than 7 trillion dollars. if you compare the stock market, you will be amazed that the daily turnover of the stock market is not even capable of comparing forex market
High manipulated stock market vs. manipulation less forex market
The stock market is prone to fund buying and selling. If any giant body or sell large amounts of any particular stock, then there is a high chance that the stock prices will be affected by this decision.
Even many entrepreneurs or business tycoons can manipulate it by making any significant decision regarding the stock market.
Whereas any single entity can not manipulate the forex market. The big reason behind this is the forex market is a highly liquid market. Major currencies are highly liquidated, so it is impossible to manipulate the fx market.
Big banks, hedge funds, central banks all trade this market, but no one can manipulate this market.
Exchange houses’ opening hours in the stock market vs. 24 hours open forex market
Forex market is a 24 hours open market, whereas the stock market is defined as an exchange house’s opening hours.
In the forex financial market, most of the online brokers open from Sunday 5.00 pm est. Transactions continue the whole week and again close Friday at 55 .00 pm est.
If you concentrate on the stock market, then different exchange houses open and close at different times. Like in the united states of America, stock exchanges open at 9.30 est and close at 4.00 pm est.
No commission in forex & commission in stock market
Nowadays, most forex broker houses charge no commission in currency trading.
This zero commission plays a vital role that is why retail traders & beginner traders choose the forex market over the stock market.
Tight spread, zero commission, no hidden extra transactional cost made the currency market so popular. But if you are a stock trader, then you need to pay a transactional cost.
Go long or short
In the stock market, you only have choices to take a long position. In the future when the market rises or more specifically when the price movements of that individual stock get high then you sell that share. You make a profit!. But in the forex market if you analyze the market and find that the value of any currency will decrease against the other currency you can sell that currency pair. If your analysis proves correct and that particular currency price gets devaluated or the trading price of that pair lessens then you just close the position of that trade and you make a profit. This is one of the key difference between stock trading and forex trading among many differences.
Market influencers
Although both the share and forex market is influenced by or moves by supply and demand. But you need to focus on some different factors in these two markets.
while trading stock you need to focus on your buying share company’s debt level, cash flows and earnings, and some other few factors. But when you come to the forex market then you need to pay heed to the macroeconomics of the country which currency you are buying or selling. Some more factors you need to give focus on are given below
- Unemployment rates
- inflation rates
- GDP-Gross domestic product
- major political events
Trading strategies
In the forex market whether you are a day trader or swing trader or position trader or scalper you don’t need to worry about resources and strategies. You will get plenty of technical analysis and fundamental strategies. default indicator-based strategies like MACD trading strategy, RSI strategy, stochastic strategy, Moving average strategy or if you like customized indicator strategy like automatic support resistance strategy, non-repaint reversal indicator,3 level ZZ semafor strategy everything is available in the forex market. And all of these strategies you will get free of cost. But if you want to take some advanced course like ultimate traders program then you need to cost some extra cash!
Whereas in the stock market you won’t get such varieties of strategies. you will get a handful of strategies here.
Final talk
It doesn’t matter whether you are a forex trader or stock market trader; if you wish to trade, you need to gain knowledge regarding trading. You need to acquire experience. And the experience will come from an active demo or live trading. Only by trading actively you will be able to compare both financial markets. When you compare the difference between stock trading and forex trading, undoubtedly, the forex market will win with its many facilities.
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