How Is the Forex Market Different from Other Financial Markets?

The forex market differs from other financial markets, such as the stock market, in several key ways:

1. 24-Hour Trading & Global Reach

• Unlike stock markets that operate within fixed hours, the forex market runs 24/5, continuously moving through major financial hubs: Tokyo → London → New York.
• It is not tied to a single exchange, but operates over-the-counter (OTC), allowing global participation.

2. Market Size & Liquidity

• Forex is the largest financial market in the world, with daily trading volumes exceeding those of all global stock exchanges combined.
• High liquidity ensures easier trade execution and tighter spreads.

3. No Single Ownership or Centralization

• The stock market consists of individual company shares, whereas forex trading involves currencies, which represent entire economies.
• Currencies cannot go bankrupt, unlike companies, which can lose all value.

4. Different Risk & Trading Strategies

• Stocks are influenced by company performance, earnings reports, and microeconomic factors.
• Forex is more impacted by macroeconomic indicators, such as interest rates, inflation, and geopolitical events.

Similarities Between Forex and Stock Markets

• Both markets use technical analysis, such as chart patterns and indicators.
• Long-term trading in both relies heavily on fundamental analysis.
• Concepts like settlements and rollovers are present in both markets.

Although forex and stock markets share some trading principles, transitioning between them requires understanding their unique dynamics.