Compare Forex Trading to Stock Trading

The foreign currency exchange (Forex) market is by far the biggest and liquidest financial market on the planet. In contrast to stock exchanges, the forex market operates over-the counter. There is no clearing house or central exchange where orders can be matched.

In the past, forex was only open to Hedge Funds. Retail traders and investors were not allowed to access it. Retail traders have only recently been able to trade forex. Retail investors have been able to trade stocks for a much longer period of time. The recent advances in computer trading technology have made it possible for retail traders to easily trade foreign exchange or stocks from virtually anywhere on the planet with Internet access. The ease of accessing and the low cost has greatly increased retail trader’s odds to win, in forex and stocks. Which is the best option for traders? These are some comparisons for retail stock and forex trading.

Trading Hours: Its Detriment to Retail Stock Market Traders
While the US stock exchange is only open from 930am until 4pm, Forex markets are available 24 hours. Forex traders may trade anytime, but stock traders must limit their trading to between 930am to 4pm. The fact that retail traders are restricted to trading during the pre-market and post-market times (4:30pm-6:30pm) is a major disadvantage. It is also during pre-market and after-market hours when most companies announce their earnings, which have an impact on the price of the stocks. The retail traders, which includes many of us (including myself), could not watch price changes during those hours. The stop orders will not be fulfilled during those hours. Forex traders are not affected by this disadvantage. Also, stock traders can supplement their stock trading with forex trades outside stock trading hours.

Most major stock exchanges are more regulated in general than the forex market. This is why traders should know the difference between stock markets. However, there are plenty of reputable forex broker on the market. Finding a reliable and suitable forex broker isn’t difficult with the right research. In light of the few points mentioned above, Forex trading appears to be an excellent trading alternative, particularly in these uncertain times for the global economy. During bullish market conditions, stock trading may be a viable option. Forex trading is a great way for stock traders to complement their business. A stock trader can use forex trading to take advantage of opportunities during times when stock markets are closed. Trading in forex would allow stock traders to have a broader view of global economies and enhance their skills.

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