Forex Open Market – Differences Between The Forex Market And The Stock Market
The forex open market is also known as the foreign exchange market or FX market. It is based on currency trading, using any two countries that have different currencies. The forex market was established in the 1970s so it is now over 30 years old. The primary difference between the forex market and the stock market is obviously that forex trading is based solely on currencies and not on the values of either companies or physical commodities.
Another difference between the stock market and the forex foreign exchange market is the vast trading that occurs on the forex market. Millions and millions of dollars that are traded daily on the forex market – almost two trillion dollars a day. The forex market involves governments, banks, financial institutions and similar types of institutions. The amount traded is much higher than the money traded on the daily stock market of any country.
What is traded, bought and sold on the forex currency trading market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. The availability of cash in any currency in the forex market is something that can change fast for any investor from any country.
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A further difference between the stock market and the forex market is that the forex market is global, worldwide. The stock market is something that takes place only within a country, based on businesses and products that are available or listed within a country. Currency trading is based on inter-country relations and in a sense has no boundaries.
The stock market has set business hours. Generally, this will follow the business day of the particular country, and will be closed on banking holidays and weekends. The forex market is generally open 24 hours a day because the vast number of countries that are involved in currency forex market trading, buying and selling are located in so many different time zones. As one market is opening, another country’s market is closing, so forex market trading can be almost continuous around the world.
The stock market in any country is going to be based on only that country’s currency, for example the Japanese yen for the Japanese stock market, or the US dollar for the United States stock market. However, the nature of the foreign exchange market is that it covers many countries and operates in many currencies. Almost every currency is covered, and this is a major difference between the stock market and the forex open market.
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