FX VS EQUITIES

Investors planning to enter the Fx market have to understand the difference between trading in equities and trading in FX market. One of the big differences is that you buy one currency and sell another currency in foreign exchange market. In equities market however it’s a big decision to go short. While in forex you simulataneuosly go short. Basically , your buying one currency by paying in another currency. Concept of going short hence is present in every transaction.

Another difference is that currency markets are open 24 hrs and FX is traded on one price at a point of time in the entire world. It is a truly global market. Whereas equity has a specific time to trade and the trading of the stock the real depth of the market is when the local market is open. For example from 9:00 to 4:00 so you know when the trading begins and when the trading ends. This is one of the biggest difference that makes FX a truly global market. So, trading is done in real time and  the nature of the market is what is a major difference among the two.

Another difference is that while trading in equity, you have a numerous, uncountable list of stocks that you can trade in and follow. However in FX you have a list of eight major country currencies, which are considered to be the most developed countries. It is written everyday about them in the papers.

It is sometimes difficult to analyse a stock of a company as the financial data is not given out. However it is very difficult to keep a country’s financial status under wraps. So, judging the currency trend becomes relatively easier.

Another major difference is that forex is affected by even a slightest geopolitical change. While equity on the other hand, depends totally on a company’s performance.

It is important for an investor to be aware and educated about these factors before they start investing.

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