Stock trading and forex
Today, there are so many forms of trading but two of the most viable for people are the stock
trading and the foreign exchange or forex. For you to understand which one would suit your
preference best, it would be good to understand the difference and similarities between the
two before you make that final decision.
In stock trading, the first thing that you need to understand is what "stocks" means. As defined,
"stocks" are the "smallest unit of ownership in a company". Here, since you own a share of a
company’s stock, you are a part owner of the company, thus, you reserve the right to vote on
members of the board of directors of the company as well as in other matters concerning the
There are actually two types of stock—the "common stock" and the "preferred stock". The first
type is the kind that mostly held by the majority of individuals while the other is just like the
first type, only that it restricts you to have more freedom than the former except in the
Forex or Foreign Exchange refers to a market wherein the different currencies in the world are
circulated. Simply put, “forex” refers to the market where one can find almost all currencies
across the globe and gain profit from it. In forex, all of the global trades are rooted in a real
time. Here, the transactions for goods and services are done 24/7 all over the world. These
transactions for specific kinds of services and goods are usually done across the national
borders, thus, requiring for non-domestic currencies as payments.
Some people often confuse the stock market with the foreign market. This is because they think
that they both have the same operations and functions in dealing and transacting business. But,
there are big differences between the two. A good trader must know it at heart to be able to
deal with the challenges in the forex and came out triumphant in it.
The major difference
Experts say that is very important to understand what sets forex apart from other types of
market out there. People who are planning to get into it should familiarize themselves with the
structure of the forex to be able to come up with strategies and approaches that will create an
impact to the market and will generate a lot of transactions across the globe.
The first thing that sets forex apart from other markets is time or the time frame. Experts say a
good trader in the forex should know that this industry is the only industry that literally runs 24
hours a day and 7 days a week. This understanding will lead the trader to come up with various
techniques and methods to make transacting easier, efficient and good results.
Another thing that sets forex apart is the absence of exchanges. In the forex, there are no
exchanges in terms of transactions but there is what they call the “exchange-based” forex that
usually come in the forms of futures.
Where forex transactions are done is what also sets forex apart. Unlike in other markets, the
transactions in forex trading are coursed through the inter-bank market wherein the bank itself
will directly handle the financial transactions coming from various local and international
dealers and brokers.
Over the years, more and more people are fascinated and interested in getting into stock
trading and forex this is because they are now seeing how viable and profitable the process
could be. But of course, this can only be beneficial to those who understand the market very