Differences between Stock Market and Forex Market
Forex, short for foreign exchange, is a type of marketplace where currencies are bought or sold according to their speculations. The stock market, however, deals with shares in a company. It deals with units of ownership an individual has in a company.
Traders are often at ends when they compare the stock market and Forex (ตลาดหุ้นและฟอเร็กซ์, which is the term in Thai). They make different judgments in different situations. While choosing a trading style, it all comes down to which trading style suits you the best. But knowing the differences between these two styles will take a trader a long way. Mentioned down below are some of their differences to help you gain insight into which is a better choice for you.
Exchange Vs OTC
Stock markets are traded at the stock exchange which reaps higher profits. Traders and investors get various benefits. While in the Forex market, they are traded over-the-counter and the exchange takes place between the buyer and seller privately. Trading in stock exchanges is safer than in other places.
Cost Of Entry
The stock market requires bigger capital than a Forex market. This has also been covered in an eightcap broker review (รีวิว โบรกเกอร์ EightCap, term in Thai). Forex market is an easier way of getting into the financial market. Such differences between them can lead to both pros and cons in different aspects.
Buying And Selling
Forex trading includes the buying and selling of currencies simultaneously. It involves speculating when a currency is expected to rise or fall in comparison to another. In the case of stock trading, you either buy or sell stocks at one time. It involves buying or selling stocks when one thinks that they will rise.
The Difference In Their Spreads
In the case of Forex trading, the difference between the asking and selling price is not that significant. The major currencies that are involved in it like euros, dollars, etc., are tightly spread. In the longer term, the spreads of Forex trading are a lot cheaper than the ones in stock trading.
Speculation Vs Investing
Stock market and Forex are different. Speculations on stocks are high while speculations made on Forex trading are cheaper. You also need significant capital to speculate in the case of stock trading. But this is not the case in Forex trading.
There are many more differences between these two styles. But everything in the end, comes down to one question; how much risk is a trader willing to take? Making informed decisions and knowing what you can about these two different trading styles is important to ensure that you are choosing the best option for yourself.