subject: Forex Automoney - Foreign Exchange Market Is Different From The Stock Market [print this page] The foreign exchange market is also known as the FX market, and the forex market. 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 when people and institutions trade forex. There are 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.
A stock market is unique to whatever country it is in, and provides a place to trade stocks that are mainly within that country. On the other hand, the Forex market is universal, and includes the currencies of most major countries.
Because there is only one Forex market, and it is worldwide, it needs to be available 24 hours a day, as the market spans many countries in many different time zones. Since stock markets are basically "local" to their country, the stock markets will be open when businesses are open in that country. Therefore, the stock market's availability will mirror business availability. This will include weekends, holidays and any other non-working days. The stock markets' hours will also follow the business hours of whatever country it is in.
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, when you trade forex, 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.
by: Robert Leviton
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