Stock markets are available during stock
exchange hours and several major exchanges including the NYSE and
NASDAQ have introduced some extended trading hours. The catch,
however, is that extended trading sessions are generally
characterised by low trading volumes and low liquidity.
Forex market sessions are technically
restricted to business hours like the stock market, however, there
are multiple markets all over the world in different time zones and
so traders can participate in the markets 24 hours a day. The market
only stops over weekends and holidays, but with the moving time
zones, even these days are squeezed tighter, almost making
forex a 24/7 market.
One drawback of the forex market operating 24 hours is that the
market is still changing even when you are not actively trading and
you may have to work at odd hours to realise certain
Forex prices are predominantly affected by
global news, exhibiting sensitivity to emerging political and
economic situations in other countries. You’ll need to keep up with
macroeconomic issues like GDP, regional employment growth, and
Stock prices may respond to large-scale
movements in macroeconomic conditions, but they normally respond to
news or earnings reports about the company’s underlying the stock or
the sector the company is in. Knowledge of metrics like a company’s
cash flow, profitability, and debt is essential.
Forex brokers typically charge no commission,
making their margin on the spread instead. Forex majors normally have extremely low
spreads and transaction costs because high liquidity tends to equate
to tighter spreads and lower transaction costs.
Exotic currency pairs are far less liquid
and so they have higher spread and higher transactions costs
compared to major and minor pairs. Similarly, the stock market has
lower liquidity, resulting in higher transaction costs. Stock
traders have to pay both the spread and commission to a
Stock trading on all major exchanges has many
regulations and limits but forex trading is a lot less regulated which has
both positive and negative effects. The major stock exchanges may
impose some unwelcome limits but this protects you to a degree that
trading with some forex brokers doesn’t. However, this is where
your due diligence pays off when choosing a regulated broker.
Forex investment or stock
trading: Which is better for you?
Some traders choose to trade both
forex and stocks but if you have to choose one,
it all comes down to your knowledge of each market, your goals, your
trading style, and risk appetite. Both markets offer diverse
investment opportunities with different perks and risks, so you have
to choose what works best for you.
Whichever market you choose, you’ll be
able to trade with FP Markets. They offer the ability to trade
forex, stocks, and a wide range of other
financial instruments with advanced trading