Stock market | Forex trading guide for beginners | How do they work | 2021 latest guidelines —Giditechs

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Stock market investing for beginners and forex trading

#what is stock market #what is forex trading #stock market vs forex trading

Stock market refers to a public market which brings opportunity for individuals or investors to come together for the buying and selling of stocks (shares) to increase income.         

 Forex trading (FX trading) is the global decentralized or over the counter (OTC) market for the trading of currencies. 

Contents:

  • What is stock market?
  • How are stocks traded?
  • What is forex trading?
  • How are forex traded?
  • Differences between stock market and forex trade?

Differences between stock market and forex trading

What is A stock market?

Stock market

Stock market refers to a public market which brings opportunity for individuals or investors to come together for the buying and selling of stocks (shares) to increase income. Stock exchange markets help the investors to expand their companies exponentially. These exchange occur between stockholders and investors.

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How stocks are traded

Most stocks are traded on exchanges such as the New York Stock Exchange (NYSE) or the NASDAQ. Stock exchanges essentially provide the marketplace to facilitate the buying and selling of stocks among investors. Stock exchanges are regulated by government agencies, such as the Securities and Exchange Commission (SEC) in the United States, that oversee the market in order to protect investors from financial fraud and to keep the exchange market functioning smoothly.

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Although the vast majority of stocks are traded on exchanges, some stocks are traded over-the-counter (OTC), where buyers and sellers of stocks commonly trade through a dealer, or “market maker”, who specifically deals with the stock. OTC stocks are stocks that do not meet the minimum price or other requirements for being listed on exchanges.
OTC stocks are not subject to the same public reporting regulations as stocks listed on exchanges, so it is not as easy for investors to obtain reliable information on the companies issuing such stocks. Stocks in the OTC market are typically much more thinly traded than exchange-traded stocks, which means that investors often must deal with large spreads between bid and ask prices for an OTC stock. In contrast, exchange-traded stocks are much more liquid, with relatively small bid-ask spreads.

What is forex trading?

Forex trading

Forex trading (FX trading) is the global decentralized or over the counter (OTC) market for the trading of currencies. This maket determines exchange rates for the trading of currencies. It is the largest market in the world after the credit market.

How does forex trading work

Unlike shares or commodities, forex trading does not take place on exchanges but directly between two parties, in an over-the-counter (OTC) market. The forex market is run by a global network of banks, spread across four major forex trading centres in different time zones: London, New York, Sydney and Tokyo. Because there is no central location, you can trade forex 24 hours a day

There are three different types of forex market:

  • Spot forex market: the physical exchange of a currency pair, which takes place at the exact point the trade is settled – ie ‘on the spot’ – or within a short period of time
  • Forward forex market: a contract is agreed to buy or sell a set amount of a currency at a specified price, to be settled at a set date in the future or within a range of future dates
  • Future forex market: a contract is agreed to buy or sell a set amount of a given currency at a set price and date in the future. Unlike forwards, a futures contract is legally binding.
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