There are many peoples who thought that, forex and stocks market is similar but the word is not correct properly. Here are the key differences between them.
The stock market is one of the most powerful tools for generating wealth, but many people are intimidated by its volatility. The forex market is usually less volatile, even though it is traded around the clock in over 200 centers with trillions of dollars being exchanged every day. Many investors see the two markets as similar when in fact there are vast differences between the markets.
The forex market is a decentralized global network of traders while stocks are traded on specialized exchanges because they represent ownership in a specific company. In the stock market, you have an individual portfolio where your capital depends on your ability to pick winning stocks from time to time.
In the forex market, it's impossible for an individual trader to pick a currency pair and beat the entire market over time. There's no such thing as "beating the stock market." The forex market is all about probabilities and math, while stocks are more of an art form.
In the forex market, there is no formal centralized exchange like the NYSE. Forex transactions are done over the counter, which means traders trade directly with one another.
In the stock market, many stocks are leveraged because using credit allows you to make more money on your investment. Forex is not leveraged, which helps protect investors from unexpected losses. When you trade forex, you must pay close attention to leverage because it works against you.
The forex market is decentralized where traders are scattered throughout the world. Most stocks are traded in the country of origin, but many are also traded internationally.
Forex trading is done through a broker whereas you would buy stocks through an investment broker who assists you through the entire transaction, including finding and purchasing suitable stocks.
If anyone asked you which market is the most liquid in the world the answer will be Forex Market. Almost $6 trillion dollars are traded in the market each business day. You should get some ideas about the market how many traders could engage in it. Everyday forex market is expanding more and more also new traders are entering in it.
In the stock market, buying and selling take place (generally) during business hours. In forex, currencies are traded 24 hours a day and all transactions take place electronically.