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Forex Vs Stocks - What The DifferenceForex can be compared to stocks to establish the one that has more advantage over the other. When you consider the time allocated for trading, the foreign exchange market is superior to stock trading, as the Forex market never sleeps. It is a 24-hour market that continues all day and night, apart from weekends. This enables Forex traders to react to market fluctuations and currency patterns in real time and therefore avoid incurring huge losses.
In contrast to stocks, understanding the Forex market has few complications. There are few number of currencies traded daily in the foreign exchange market as opposed to thousands of stocks traded in the stocks market. Engaging in stocks trading can be a daunting task especially since there are thousands of fluctuating stocks on a daily basis that need to be analyzed.
In terms of size, the Forex market is larger than the stock market by far. In fact, the Forex market is the largest financial market in the world. It has a daily turnover of over $4 trillion dollars. The Forex market is moved by large financial institutions although individuals participate, as well. The individuals trading is negligible in terms of volume therefore, their effect is not greatly felt.
This is in great contrast to the stock market that is affected by small individual investors. You can find millions of small investors who make haphazard trades and thus, make predictions harder. Most stock market investors realize huge profits when the economy is booming. During this time, the value of stocks often rises.
On the other hand, stock market investors incur losses during an economic downturn. The Forex market is more dynamic, as traders can make profits even during an economic boom or recession.
The Forex market offers many advantages through a simulated account. This instrument is absent in the stock market and therefore stock traders cannot get its advantages. One of its benefits is that one can trade using real-time prices without investing real money to his or her trading account.
The simulated account enables traders to trade real life situations such as access to tools for technical analysis that can help them predict market fluctuations and possible potential areas of trade. Therefore, one can practice the art of trading in foreign exchange without actually losing money. Stock trading has no simulation tools. You must, consequently, invest money and lose it before learning the loopholes and tricks.
By: Shawn James
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