Forex Market Compared To Stock Market

There are a number of unpleasant events that a person must learn to deal with in life

. After a while, these problems are no longer considered as a burden but instead a norm. As for traders, there are also unpleasant occasions that can be considered as normal or a part of the job.

One of these problems is the partial fill. The partial fill is a normal incident in stock trading. It occurs when a trader puts an order for a definite number of shares and instead receives only a portion of the order. The market will not be able to absorb an entire order if there are not enough shares available at a defined price. This can be frustrating for the trader, especially if he or she wants to pursue large orders. Still, this kind of event is considered as normal for equity traders.

Slippage is another problem that futures and stock traders encounter every day. By definition, slippage is the difference between the anticipated transaction costs and the amount actually paid. Slippage tends to cut into the traders profits and is a major headache for futures and stock traders.

Aside from those two, another hurdle that a trader must overcome is the specialist. A specialist is an individual who controls all the trading activity of a listed stock. More so, the specialist also controls the spread; he or she can widen or narrow the spread at his of her discretion. Hence, the specialist can either make your trade successful or make your life miserable.

The uptick rule is another frustrating obstacle that faces the success of an equity trader. Stock traders can place a trade that will become profitable if the stock rises whenever they wish. However, if they desire to place a trade that will become profitable if the stock falls, the traders must go through several machination processes that can be both costly and problematic.

Fortunately, the Forex market is less problematic compared to the stock market. The currency market is considered as highly liquid or thick. This is the reason why the partial fill headache evident in the stock market is extremely rare for all but the largest traders in the foreign exchange market.

Additionally, the slippage is also rare in the Forex market. Several foreign exchange market makers have a one slippage policy, thus giving currency traders a superior degree of certainty regarding the price.

As for the specialist, there are no specialists in the foreign exchange market. More so, the spread is often fixed in the currency market. This allows the trader to another greater degree of certainty.

Lastly, the Forex market has no uptick rule. The trader can buy or sell at his or her own will. Conversions, bullets or married puts are not required to be purchased.

by: Nicole Morgan

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