Difference between forex and stock trading

There are so many people in the whole world today who have not been able to understand the difference that exists between stock trading and forex trading. As a matter of fact so many people cannot really tell the difference between these two items. It is important that you get to know the differences between them, and most importantly, understand their features, and the particular features that set them apart. The reason for this lies in the fact that by so doing you will be in a good position to actually manage to compare and contrast one from the other, and in the process understand the differences between them too. This way you can take advantage of the benefits of either, and shy away from the disadvantages that would accrue to you in the event that you participated in whichever of them.

One thing that we can all agree to is the fact that the forex market is as a matter of fact the largest financial market in the world, and for this reason there are so many people who would like to take advantage of the same, and make sure that they reap the benefits. There are a number of features of this market that stand out from the rest of the financial markets in the world, which in essence form the basis for people to invest in this market and not the stock market. First of all there is the fact that the forex market is operated on an OTC (over the counter) basis. What this means is that there exists no central exchange point wherein you can go and have the chance to trade your shares. Besides that there exists no clearing house like is the case with the stock markets. What happens at the clearing house is the matching of orders for shares, which means that people who buy or sell their shares will have to wait for the orders to be matched at the clearing house for their sales or purchases to go through. This therefore is one of the most important differences that exist between the stock market and the forex markets.

The other reason why most people prefer forex trading to stock trading in the world today lies in the fact that in forex trading, there is an ease of access to the foreign currencies as compared to those who are trading in stocks. You will have realized that in the recent past there have been amendments here and there in different countries that have tried to change this position. However, in as much as that is the case, trading in forex is still far much easier than in stocks. Besides that, there are those who would like to own shares in a particular company, yet this is not possible. There are so many highly profitable companies in the world that have set down a number of restrictions with which they operate, especially as regards ownership of shares. However, this is not the case with forex trading. All you have to do is to make sure that you have the required money, and you can buy whichever currency that you so desire.