Sunday 27 May 2012

What Is The Difference Between The Foreign Exchange Market And The Stock Market?

By Ian Tate


Other names for the Foreign Exchange Market are the FX Market and the forex. The main focus of the FX market is to oversee trade between foreign countries using different currencies. The FX market was established around the beginning of the 1970's. The main purpose of the forex market is not to deal with any specific business entity, but rather to oversee the trade of currencies.

The biggest difference between the stock market and the forex market is mainly based on the ample trade that takes place in the forex market. There is a tremendous amount of money being traded on the forex every day, nearly three trillion dollars. This amount greatly exceeds any amount traded in the stock markets of any country in the world. The forex deals with banks, financial institutions and governments all around the world.

The forex market only deals with purchases that can easily be converted into cash, or with cash directly. The type of currency used and the country investors are in is of secondary importance, since the forex can make things run fast for everybody.

The fact that the forex operates around the world marks another difference between the forex and the stock market. The stock market only trades within the country. The stock market deals with trade among businesses in the country, while the forex deals with trade around the world.

The stock market opens and closes following a business schedule. It follows a typical business schedule and it is closed for holidays and weekends. The forex is always open, to be able to cater to the needs of different countries located in different time zones. Because of time changes, when one stock market opens the other closes, and the forex remains open to be available to all.

The stock market in any country only trades with specific currencies. On the other hand, the forex handles many countries and currencies. The fact that the forex offers references in many currencies is the biggest difference between the forex and the stock market.




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