InstaForex

Wednesday, September 5, 2012

Inside Trade | Distinction between the Stock market and Currency market



The two financial markets, stock and forex, are closely linked with each other and its not really surprising if similarities between them arises. But we'll tackle that some other time and instead focus on the difference between them.

The financial instrument

Both markets are involved in trading. The techniques and certain indicators used in trading apply to both of them but there is a difference in the instrument being traded. Currencies are being exchanged in Forex while securities are being traded in the stock market

Participants

Participants in the stock market are required to find each other. This complicates things because the loss may increase substantially if the traders won't find each other in time.

Location

The trading of stocks may only be done on stock exchanges unlike Forex wherein trading may take place as long as there's an access to the internet.

Leverage

Margin trading is not applicable to the stock market. A trader may only buy a stock that his/her money can afford.

Working hours

Since trading in the stock market are situated on stock exchange centers, there's an opening and closing time. The time to trade is limited unlike forex wherein trading is done 24/7.   

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