Forex vs Stocks – Which is better & Bigger?

Forex or Stocks

New York stock exchange has listed approximately 4, 500 stocks. On the other hand, NASDQ has an additional  3,500 stocks listed. Now, the question is. Which one should you trade? With so many companies listed on stock exchange, do you think you can make on top?

Forex vs Stocks

There are lots of currencies traded in spot currency trading, but many investors and market players trade the four major pairs. Isn’t it much easier for you  to keep few stocks rather than hundreds or thousands? In short, 4 pairs are much easier to keep an eye on compared to 100 or 1000 of stocks.

That’s just one of the benefits and advantages of the forex market compared to what stock markets have. Now, let’s take a look at some more advantages of forex market.

Time: 24 Hour Forex Market

As discussed in the previous lesson, forex market is open 24 hours a day. Many forex brokers are open from Sunday at 4:00 PM EST until Friday at 4:00 PM EST. Along with this is the non-stop customer service which is also available 24 hours a day 7 days a week. One of your benefits as a market player is that, you can always customize your own trading schedule even during the US, Asian and European market trading hours. That’s how cool forex trading is.

No or Minimal Commissions

Worrying about the possible transaction fees online or over the phone? Most of the forex broker charge minimal or no commission to trade currencies over the phone or online. With the combination of the tight, consistent and fully transparent spread, forex trading costs are significantly lower compared to any other markets available. So how do these brokers get compensations? They usually get compensated for their services through the bid/ask spread.

Instant Execution of the Market Orders

Under normal market conditions, your trades are instantly executed. Usually, you will get the same price as the price shown when you execute your market order. In this case , you are able to execute directly off real-time streaming prices. That’s absolutely great. Right?

In this kind of scenarion, as a market player, you need to make sure that you understand the different terms and conditions. Many online brokers only guarantee stop, limit, and entry orders under normal market conditions. So, you need to bare that in mind. Another thing, you need to understand that fills are instantaneous most of the time. Thus, under extraordinary volatile market, order execution may experience delays.

Short-Selling Without an Uptick

Worrying about restrictions on short selling? Worry no more. Unlike the equity market, short selling in the currency market has no restrictions. Therefore, trading opportunities exist in the currency market regardless of whether a trade is long or short. They also exist whichever way the market is moving. Trading always involves buying and selling one currency and another, thus structural bias to the market does not exist. This is one of the advantages of trade and forex market.  You always have equal access to trade in a rising or falling market.

No Middlemen in Forex

A market player or a trader gets a lot of advantages from centralized exchanges, but the involvement  of middlemen is one of the problems in a centralized exchange. The presence of middlemen in between the trader and the buyer or seller of the security or instrument traded will const them money which can either be in time or in fees.

On the other hand, spot currency trading is decentralized. This only means that quotes can vary from different currency dealers. With this kind of competition among dealers, you are almost always assured that you’ll get the best deals because forex traders get quicker access and cheaper costs.

Buy & Sell Programs Don’t Control the Market

Do you know that the stock market is very susceptible to large fund buying & selling? This involves selling the X or buying the Z.

When it comes to spot trading, the huge size of the forex market makes the fund or bank controlling a certain currency very small. Among the participants in the spot currency markets where liquidity id unprecedented are banks, governments, retail currency conversion houses, hedge funds and large net worth individuals.

Analysts & Brokerage

Analysts and brokerage firms are less likely to influence the entire market. No one can ever control the market, whether its a big entity or a very rich person. “Buy” when the stock is rapidly declining is a very common thing. The government may step in and discourage this kind of relationship, but let’s accept it, it’s the nature of these relationships.

For the brokerage and companies that are going public, IPOs are considered to be big businesses. Analysts work for the brokerage houses that need the companies as clients. This is the reason why relationships are mutually beneficial. Always remember that the catch-22 will never get lost.

Foreign exchange is the ultimate market that generates billions and trillions of revenues for the world banks making it as a necessity of the global markets. In addition to this, Forex analysts have lesser effects on the exchange rates. Their main task is to analyze the forex market.



It is clearly shown above that Forex has all the positive traits of a market. This means that Forex won over Stocks.

In the next lesson, let’s find out if Forex will still keep itself on top versus Futures.

For more information about forex, feel free to check our forex training videos.

Proceed to Forex vs. Futures

Back to Previous Lesson: Advantage of Forex



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