As we all know, the Forex or the Foreign Exchange Market is the largest financial market in the world. It has become very popular in the last couple of years. Day by day, people are getting more eager to trade in the forex market. The forex currency trading is somewhat different from other stock and commodity trading. Here goes the comparison:
LiquidityIn the whole world, the forex market is the most liquid financial market, where around 1.9 trillion dollars are traded on a daily basis. Around 440 billion dollars are traded in the commodity market every day, and around 200 billion dollars are traded in the U.S stock market per day. This helps in better execution of the trade and manipulation in the market is also prevented.
Times of tradingThe forex market is open 24 hours a day and 5 days a week. That means, in the U.S, the forex market opens at 3:00 pm Sunday (EST) and closes at 5:00 Friday (EST). This enables the traders to trade according to their convenient time. Depending on which commodity you are going to trade, there are trading hours all over the board.
Trading costsIn the forex market, the difference between the buy and sell price of each currency pair is called the transaction costs. There are no brokerage fees in the forex market. In both the stock and community markets, there are brokerage fees and transaction costs. In case of the latter, the fees will add up, even if you use discount brokers.
Minimum investmentThis is one of the most important features of the foreign exchange market. It requires a minimal amount of money in order to open a forex account. A forex account can be opened with as little as $300.00.
Focus7 major currencies are used for 85% of all the trading transactions in the foreign exchange market. There are 40,000 stocks in the U.S stock market alone. Over 200 commodity markets are there, but some of them are so illiquid that they cannot be traded, except by the hedgers.
Trade executionThe execution of trade in the forex market, is done almost instantly. But this is not the case in the equity and community markets. In the equity and commodity markets, you wait for a broker to execute your trades. And, the results you get are sometimes contradictory.
This article is sponsored by Fibo Group (
www.fibogroup.eu ).