On any stock exchange, a huge number of shares are traded. For example, the New York Stock Exchange registered almost 3,000 shares, and on the NASDAQE – another 3100 companies. It is rather difficult for a typical novice trader to decide what he will trade, as to follow thousands of shares is problematic, and you need to narrow the circle of trade.
Due to these and other reasons, many choose Forex. Below we will talk about the difference between these two trading floors.
- Round the clock trading
- Minimal commission or total absence of fees
- Instant execution of market orders
- Without intermediaries
Round the clock trading
The forex market is the only trading platform in the world that does not stop working at all. Of course, each trading session has its limits, but due to the difference in time zones, trade is not interrupted. The first to start working Sydney on Sunday evening, then, connects Tokyo and London, and New York completes this series. When New York “fell asleep”, Sydney again works. This allows traders to work always, regardless of time of day and territorial location.
In contrast, stock exchanges have certain hours of work, which is not very profitable for operational work.
Minimal commission or total absence of fees
Most forex brokers carry out transactions of their clients, without charging commissions and other fees. Also there are no fees for individual transactions on the Internet or by phone. However, on the stock exchanges, the shareholder will pay, at a minimum, to the intermediary, thanks to which the deal can take place.
Instant execution of market orders
Due to extremely high liquidity, the Forex market will provide instant execution of orders at the current price. Thanks to the immediate operation, the trader is confident in the result of the transaction, and on the whole it attracts investors to the foreign exchange market. Of course, there are situations with increased activity on the part of traders, but this is not so often – Forex is able to withstand huge trading volumes. Recall that the daily turnover of Forex exceeds 5 trillion dollars.
Holders of shares understand that they can only trade with them from centralized exchanges, and this of itself implies intermediaries. On Forex, this is not and cannot be, because traders directly trade in the foreign exchange market, independently concluding the transactions that interest them.
Any intermediary who stands between the buyer and the seller will want to have some remuneration for his work, and this is an additional disadvantage to the party that wanted to use the services of the intermediary. All this suggests that forex traders earn more (well, or, otherwise, lose less).