Nahda News

One must not confuse a foreign exchange market from a stock market. First, the latter has an address. In the United States, Dow Jones is located at 15 Wall Street, New York. Recall that stock markets are also corporations, and our example is officially known as Dow Jones and Company and we all know that the current CEO is Les Hinton. A foreign exchange market has no permanent address. People trade not in huge halls surrounded by screaming brokers and humongous computer screens, but they trade within the comfort of their homes and in Wi-Fi coffee shops.

Forex is much bigger than the stock markets. The estimated trading volume is just too high. Some experts say that the forex trading volume in a day is up to 100 times bigger than in the stock markets. This is true because transactions are done virtually done everywhere and in every single square kilometer. Tourists conduct foreign currency exchange every minute of the day. International banks conduct foreign currency exchange every single second in their all their branches.

In online currency trading, there are no such words like closing bells, opening sessions, and recess. The business is done in a 24 hour cycle. If the trading floors of Asia close, forex is still very much alive because the forex is open in Europe. When the European stock markets close at around 5:00 pm or 6:00pm, foreign exchange trading still goes on because the American markets are already open.
The major difference is the pricing. All participants in stock markets have access to the same price. This is not the case in foreign currency trading because participants at different levels have access to different prices. The top players including the commercial banks, investment houses, and securities brokers trade at a much different level than the small time retailers. They can peg currencies at very low pip. For an ordinary trader selling currencies at 10,000 or 100,000 units, the small pip (percentage in point) difference is useless, but for the major traders that sell and buy currencies in the millions and even billions, the small pip is very significant.