Foreign Exchange Market And The Stock Market
There had been a lot of news about the fall of the US dollar, and the rise of the Euro and basically just about any currency. Apart from affecting the token tourists or importers/exporters, people can make money out of trading currencies.
The foreign exchange market is also known as the FX market, and the forex market. Trading of currencies takes place in the market. You can choose to buy UK pound, US dollar, Yen or Swiss Franc. These are the major markets. Trading that takes place between two counties with different currencies is the basis for the fx market and the background of the trading in this market. The forex market is over thirty years old, established in the early 1970′s. The forex market is one that is not based on any one business or investing in any one business, but the trading and selling of currencies.
The difference between the stock market and the forex market is the vast trading that occurs on the forex market. There is millions and millions that are traded daily on the forex market, almost two trillion dollars is traded daily. The amount is much higher than the money traded on the daily stock market of any country. The forex market is one that involves governments, banks, financial institutions and those similar types of institutions from other countries.
What is traded, bought and sold on the forex market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. From one currency to another, the availability of cash in the forex market is something that can happen fast for any investor from any country.
The difference between the stock market and the forex market is that the forex market is global, worldwide. The stock market is something that takes place only within a country. The stock market is based on businesses and products that are within a country, and the forex market takes that a step further to include any country.
The stock market has set business hours. Generally, this is going to follow the business day, and will be closed on banking holidays and weekends. The forex market is one that is open generally twenty four hours a day because the vast number of countries that are involved in forex trading, buying and selling are located in so many different times zones. As one market is opening, another countries market is closing. This is the continual method of how the forex market trading occurs.
The stock market in any country is going to be based on only that countries currency, say for example the Japanese yen, and the Japanese stock market, or the United States stock market and the dollar. However, in the forex market, you are involved with many types of countries, and many currencies. You will find references to a variety of currencies, and this is a big difference between the stock market and the forex market. There are some people who only spend 5 – 10 minutes a day to execute their forex trades. All they do is to focus on one pair of currencies.
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I agreed with ya .. Liquidity is a issue in the stock market .. U can only choose stocks which are very liquid and have high trading volume den it is easier to sell and buy the counters .. But forex seems very far n foreign from the general public .. I guess in some ways, the stock market is still closer to the general public ..
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