subject: The Forex Market Versus The Stock Market [print this page] The foreign exchange market is also known as the FX market or the forex market. The buying and selling of different currencies which takes place between two counties is the basis for the forex market. The forex market is close to forty years old, established in the early 1970's. Forex is not based on any one business or purchasing stock in a business, but instead the trading and selling of currencies.
The difference between the stock market and the forex market is the vast trading that occurs in forex. There are trillions of dollars traded in the marketplace. The amount is considerably larger than the stocks traded in the world markets. The forex market involves governments, financial institutions, hedge funds, individual traders, and similar institutions.
What is exchanged, purchased and sold on the forex market can quickly be liquidated, which means it can be converted back to cash quick. This offers a significant advantage over markets with less volume that are more illiquid. From one currency to the next, exchanging money between various currencies happens quickly in the forex.
Another difference between the stock market and the forex market is that the fx market doesn't rely on a central exchange.. Most Americans know the stock market as either the NYSE or the NASDAQ, both of which have centralized exchanges in New York City. The forex market is a complex network of banks, interbank dealer, market makers, and finally the traders.
Stock markets have set business hours during which trading is open. Generally, these hours are limited to business days and the markets are frequently closed for banking holidays. The forex market, by comparison, is open twenty four hours a day. Many brokers close operations during the weekend, but the actual forex market is still functioning. As a typical forex trading session on one continent is closing, another one is starting. Recognized trading sessions include the asian, european, and united states sessions.
Those are the basic differences between the forex market and the stock market.
