ForEx vs Stock market

The dream of every investor is low or stable inflation so that capital does not lose value while lying on the account. The release of the foreign exchange markets now allows millions of dollars to be converted into euros with virtually one click.

What do we trade in Forex?

The list of available assets for trading is quite large. We can choose from nearly 100 different currencies, including exotic South African currencies. The biggest difference between a Forex exchange (for the investor himself, that is, for us) is that in the case of exchange rates, we pay one currency for another. What are the consequences? In fact, the exchange rate rarely drops to zero. The increase in the single currency also has its limits. If one currency simply becomes cheaper, then investors buy and then sell.

The stock exchange rate (and indices) can drop to zero. They can grow too. Because of this, fluctuating prices in the stock market will always be higher than in Forex. This is the most important difference because the price is much lower. Everyone in the world has some kind of currency in their hands. That is why the foreign exchange market is the largest financial market in the world (see https://nsbroker.com/investment-strategies/simple-forex-scalping-trading-strategy for details).

Where did the name Forex or Fx come from?

The meaning of Forex is nothing more than foreign exchange. The short name from Forex is "Fx". Forex is a currency and it was accepted that it is a currency exchange. We often talk about Forex as an investment platform where we invest with leverage. Thus, Forex nowadays means not only currencies, but also indices and commodities. People talk about Forex as a tool in which one can invest with a very large leverage.

There is no one center in the foreign exchange market, as is the case with the exchange. There is not a single institution, one world price at a time. Thus, there may be differences in the exchange rates in each bank. However, in the stock market, their prices are the same. Foreign exchange brokers keep track of currency quotes at various banks and try to represent the average exchange rate possible for their clients. Rarely are there minimal price differences between individual brokers. Therefore, foreign exchange markets are by definition independent. However, as is often the case, after we learn that even in such a large and deep market as the foreign exchange market, one powerful bank can directly influence the price.

On the stock exchange, you can check who and how many shares of a given company have and what the turnover is. There is no single summary table of turnovers or positions of individual players in currencies. There is simply no such statement of all investors.