As the Forex trading market only continues to grow in popularity, more and more traders are beginning to compare its market with the traditional stock trading market. Although they offer very similar trading approaches, there are a vast number of differences, and those who are reading guides or tutorials into Forex trading for beginners will soon realise that these major differences come down to accessibility and complexity.
While the idea of Forex trading for beginners can be exciting, there are some big differences you must know about before diving into the foreign exchange market. Here’s a breakdown of just some of the differences between Forex and stock trading.
The Forex and stock markets operate at different strict schedules. The stock market is typically open for 8 hours and then closes the next day, which is why there are many ‘full-time’ traders who operate just as they would at a workplace. Forex is different, as it’s open 24 hours a day in 3 different shifts all year round, meaning there’s zero downtime. This is what’s so appealing about Forex trading for beginners and long-time traders alike. You can choose between US, Asian and European Forex trading hours, and their overlapping trading hours means people can trade all day and night.
Trading Forex is instantaneous, while traditional traders will be used to trades that take several minutes to complete. Forex trading platforms cancel out the instance in which a broker needs to confirm the stock trade. In stock trading, many aspects can affect the speed of the trade, including the type of the order placed, the liquidity of the market, and whether the marketplace is open. Forex is vastly different, as it’s instant and always accessible. Forex is also simpler in the sense that it only deals with four major currency pairs, while stock trading offers thousands and thousands of stocks that can be traded. In this sense, Forex is easier to keep tabs on over time.
Forex and stock trading are mostly different in the sense that Forex is considered to be an ‘over-the-counter’ exchange that’s conducted from wherever and whenever. Forex trading platforms even allow for mobile trading, enabling traders to execute trades at any time and in any place. Unlike Forex, stock trading is a centralised marketplace that’s mainly located in one place.
Brokers and Platforms
Forex trading provides traders with access to trading systems that offer a huge variety of resources and information, allowing them to continuously learn, determine the best time to sell or buy, and keep tabs on the market. While a lot of learning and market analysis is required for Forex trading, it’s largely self-taught, whereas traditional stock trading requires ongoing contact with a broker in order to be successful and make the smartest trading moves. For this reason, Forex is often a more attractive form of trading for people that trust their own instincts and have the time to properly learn the market.