The foreign exchange aka the FX market or ForEx market is trading that takes place between two counties with different currencies. Trading different currencies is the basis for the ForEx market and the background of trading in this market. Established in the early 1970’s, the ForEx market is over thirty years old. The ForEx market is one that is not based on any one business or investing in any one business, but is 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 are millions and millions of dollars that are traded daily on the ForEx market, almost two trillion US dollars traded daily. That amount is much higher than the amount of 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.
Currency traded, bought and sold in 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 cash. From one currency to another, the availability of cash in the ForEx market is something that can happen quickly 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 that particular country. The stock market is based on businesses and products that are within a country. The ForEx market takes that a step further to include any country’s that has any value.
The stock market has set business hours. Generally, this will follow the business day schedule, 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 country’s 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 country’s 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 different countries, and many currencies. You will find references to a variety of currencies, and that is the biggest difference between the stock market and the forex market.
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