Ask anyone and they will tell you they are familiar with the buying and selling of stocks. Buying and selling of stocks is also called share trading because stocks are issued as shares. People buy and sell multiples of these shares. Stock trading is as old as the United States. Companies have used the issuance of stocks in order to raise money to pay for expansion or to expand into new markets. If you have ever worked a day in your life, chances are you have worked for a company that has stock available for trade.
On the other hand most people are not familiar with the Forex market. They may be familiar with the name Forex because of all the recent attention on how much money anyone can make trading on this market. Forex has only been open to the general public for the past 50 years which is why it has less brand recognition with the general public. Forex does not trade stocks but instead trades currencies.
Both share trading and Forex trading have things in common. There are also some differences between the two. Let me discuss the major differences between the two investment strategies.
Access to Market
Share trading occurs through listed stock markets such as the New York Stock Exchange. On the other hand Forex does not have a listing market so it is considered over the counter trading. Because share trading occurs through the listing market there are limits on when you have access to the market. The New York Stock Exchange is only open from 9:30 AM EST to 4:00 PM EST. The Forex market is open 24 hours a day. You can place trades with Forex at any time of the day or night that you want. With share trading you are restricted to when you have access to the market to buy or sell shares.
Short Term vs Long Term
Share trading is usually considered a long term investment. The stock market is not very volatile so it is very challenging to make a quick profit in an hour or a day. In order to make a profit on the store market you usually have to hold on to an investment for a year or more. The Forex market is very volatile. Most trades are bought and sold in less than 24 hours. Forex trading is considered a short term investment.
The New York Stock Exchange and the London Stock Market are physical locations. All trades are completed through this location. Forex does not have a central location. Trades are place all over the world.
The share market is considered not to be very liquid. You are limited to the time you can access the market which adds to it not being a very liquid market. Purchasing stock shares require you to have the full amount of money available. In order to sell you need to find a willing buyer. Forex trades do not have the requirement to have the entire funds available. Since Forex trades are made 24 hours a day they have a high level of liquidity.
There are many differences between Forex and share trading.