Forex Market Vs Stock Market. Advantages and Disadvantages.
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Forex Market:- The market in which participants are able to Sell, Buy, Exchanges & speculate on currencies. Foreign exchanges market is made up of banks, commercial companies, central banks, investment management firms, hedge funds, & retail forex brokers & investors, The forex market is considered to be the largest financial market in the world.
Stock Market:- A stock Market or equity market is a public entity for the trading of company stock(shares) & derivatives at an agreed price.
Forex Market Vs Stock Market
Difference Between Forex Market Vs Stock Market.
|Forex Market||Stock Market|
|Liquidity||High to very high -All Hours.||High during market hours.|
|Trading Hours||7hours a day (Indian Market).
22 hours a day (International Market).
5 day weeks.
|9:00 am to 3:30 pm, 5 Days a week.|
|Minimum capital||Starts with a minimum amount.||Starts with a minimum amount.|
|Leverage or Margin||Yes, Can be up to 500:1 & so on.||Can be up to 40 times more for intraday. but need to clear outst&ing within 3 days.|
|Short Selling||No restriction due to forex is both way trading||Restriction on short selling & stop orders.|
|Confidence in securities||Major currencies will not fail.||Some companies will fails without notices.|
|How to Trade||Mostly trade online.||Trade online or phone call thru premises.|
|How to leverage can help grow your capital?||Intraday Trade, Your capital easily can growth few hundred percents,
but easily get a margin call if you don’t know how to manage it. No need Q buy Long, Shorts.
|Within days, capital can grow 5% to 20% ++ but same go opposite directions. Need Q during buy & sell stocks.|
Advantages of Forex Trading.
- The forex market is extremely liquid, hence its rapidly growing popularity. Currencies may be converted when bought or sold without causing too many movements in the price & keeping losses to a minimum.
- As there are no central banks, trading can take place anywhere in the world & operates on a 24- hours basis apart from weekends & holidays.
- An investor needs the only small amount of capital compared with other investments. Forex trading is outst&ing in this regards.
- It is an unregulated market, meaning there is no trade commission overseeing transactions & there is no restriction on trades.
- Low Tranjection cost.
- Ability to profit in both directions.
Disadvantages of Forex Trading.
- The major risk is that once the counterparty fails to deliver the currency involved in a very large transaction. In theory, at least, Such a failure could ruin to the forex market as a whole.
- High leverages may cause high loss.
Advantages & Disadvantages of Stock Trading.
|Work at home Low commissions.||High risk:- If a company goes bankrupt &you bought their stock your stock may be worthless.|
|Complete freedom No time bar.||Extra cost for brokerage services: Many brokers charge additional fees for trading penny stocks.|
|Make money in minutes No investment limitQuick returns.|