6 Forex vs Stocks Differences - What is Forex and How it Works?

So...you're interested in Forex trading and want to know a little more about it.

. Forex has been getting a lot of publicity recently and has attracted many new traders working from home, as well as many stock traders looking at forex vs stocks, trying to diversify into currency trading. They are wondering if it might be worth making a move or at least increasing their range so that they begin to trade both.

What is Forex and how it works? Forex is short for foreign exchange, it's a little like stock trading, but with some important differences...

Though Forex can seem a bit complicated when you're starting out, if you're really interested in trading you'll soon learn the basics and eventually get the hang of it.

Forex is a speculative form of investment, just like stock trading. which means there's risk. So before you start trading, try to gather as much information as you can, because you can potentially make or lose money trading Forex!

It wasn't until the development of the internet that the market opened up and forex vs stocks became a real choice for retail traders. Forex was almost entirely in the hands of financial institutions. Nowadays you don't need to work for a bank if you want to trade Forex and you can be placing trades right from the comfort of your own home.

OK, so let's compare Forex vs stocks and consider some of the advantages of Forex trading: Instead of dealing in stocks through the national stock exchange, forex traders deal internationally by exchanging one currency for another. They wait for the price to change, which with luck and/or good analysis will be a change in their favor, and then they exchange the currency back to close out the trade with a profit. It's a very high liquidity market with an average daily turnover that is now estimated to be close to $4 trillion a day, which is more than the combined turnover of all the stock markets in the world! One difference from stock exchange trading is that forex traders are not limited to dealing in their own country because currency trading is a global affair. You can trade regardless of where you live. You can trade on your own behalf, from anywhere in the world, making maybe a full time income. Unlike the stock market, the FX forex market is open 24 hours a day during the business week. Trading opens on Monday morning in Australia (Sunday evening US time) and does not close until Friday afternoon in the USA. So forex is a 24 hour market, five days a week. This can be advantageous for anybody who needs to trade outside of normal business hours in their own country. While speculative stock trading is difficult if you cannot access the internet during the day, you can always trade in currency in the evening. This gives the forex market several advantages over the stock market for a retail trader. One advantage of forex trading is that most brokers offer a demo mode for their account management systems, so you can test systems safely before trading with real money. Anything that reduces the risk involved in forex investments is worth doing, since you'll be protecting your funds and maximizing your profits. Always bear in mind that speculative trading is risky, whether it is undertaken in stocks or currency. If you're looking for a safe investment then forex trading may not be right for you. But if you're looking to diversify into Forex trading, remember the main differences found when you compare Forex vs stocks and try to gather more information before you start trading real money. Use a demo account and start trading with no risk while you sharpen your trading skills.

To your trading success!

6 Forex vs Stocks Differences - What is Forex and How it Works?

By: Denis Marsili

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