Although the Forex market is hugely popular, there are people who do not have any clue about it. Here are some of the facts which will make every person aware of how huge Forex trading happens to be. There are certain queries which every beginner comes across. A detailed study will surely help in sorting out the queries properly.
How is Forex market different from Stock market?
Stock market is a centralized market whereas in Forex trading, the traders can easily trade the currencies digitally. It does not have any centralized location and this is why the traders can easily trade from different parts in the world. The Forex exchange market is an over-the counter market with no central exchange policies.
In Stock trading, the traders are allowed to buy and sell shares of a specific company in a particular country. In case of Forex trading, this business involves buying and selling of pairs of foreign currencies. A trader buys and sells foreign currencies at current or determined price. The trader has to anticipate the rate of the currencies. A trader always hopes for a rise in the value of the foreign currency that he goes on to purchase with respect to the value of the one he sells.
Market Size
Forex market is the biggest liquid financial market in the world with transactions more than US $5.3 trillion on a regular basis. This lump sum amount of money easily dwarfs the stock markets. In the stock market, there are thousands of different stocks available whereas only a few pairs of currencies are traded in the Forex market.
In a Forex exchange company, the chances of manipulation are quite less as compared to that in case of stock trading. Stocks are less liquid and this is why it gets difficult for a trader to leave the market while the currency pairs always enjoy greater liquidity.