Forex vs Stocks
Overview
The forex market and the stock market constitute two of the most popular financial markets to trade worldwide. This is due to their historical volume, volatility and the large number of educational resources that are available to both forex traders and share traders.
It can be difficult to determine which assets you would like to buy and sell, spread bet or trade CFDs on. Trading stocks and forex are both popular with different types of traders, depending on personality type, and level of experience and preferred pace of your trades.
Market Trading Hours
Trading hours differ between the forex market and the stock market. The forex market is open 24 hours a day, 5 days a week, due to the overlap between time zones. This is one of the advantages of forex trading over stocks. On the other hand, there is a set daily timetable for stock market trading hours, depending on the specific region and exchange.
Volume of Assets
A particular appeal of forex trading is the volume of assets available to trade. We offer forex trading on more than 330 currency pairs, including major, minor and exotic forex pairs, which is the highest figure in the current market. Forex traders tend to lean toward major currencies such as EUR/USD and GBP/USD, as these considered to be generally stable within the forex market.
The stock market opportunities are endless, however, it does not come close to forex trade volume of around $5 billion per day. You can trade on thousands of global shares within the technology, pharmaceutical and automobile industries. This includes both blue-chip stocks and penny stocks. Some of the most distinguished global indices are traded on the stock market, such as the Dow Jones Index and S&P 500.
Volatility and Liquidity
A popular topic for the forex vs stocks debate refers to market volatility. This measures price fluctuations within the markets that can either help traders to gain profits if the trade is executed effectively, or losses if the trade is not successful. Forex traders in particular often look for high liquidity within the market, as this means that an asset can be bought and sold rapidly without having much of an effect on its price. Therefore, it is likely that high market volatility is more beneficial for short-term traders. Many forex strategies work to open and close positions in a short period of time, with the intention of making a profit from small price movements when the market is particularly volatile. This way, they can enter and exit trades with quick precision.
In contrast, long-term traders that prefer a buy-and-hold method may be less comfortable in a volatile environment. This relates especially to stock traders. Given that certain blue-chip stocks are known for their stability within the stock market, traders are more likely to open positions with a potential for profit in the long-term. Therefore, as they are not looking for short-term price fluctuations, a volatile market would not work for their trading strategy.