The foreign exchange is the trade that occurs between two nations having different currencies. It forms the base of the FX market and the foundation of dealing in this market. Forex trading is more than 30 years old, as it was firs started in the initial part of 70s.
One of the differences between the stock market and forex trading is the vast amount of trading that occurs in the forex market daily. This figure is much bigger than the amount traded everyday in the stock market of any nation. The FX market comprises of currencies, financial organizations, governments, banks, and various other institutions.
The trades or currencies purchased and sold in the forex market can be easily converted to cash since the product traded is cash. In this trading, cash availability in the forex market can take place very fast for any investor, whichever country he is from.
Another way in which the stock exchange and the forex exchange differ is that the forex market is global and has worldwide reach. On the hand, the stock exchange is restricted to a country. The stock market deals in national businesses, while forex market is more international as it includes various countries.
The stock market of any nation will use the currency belonging to that particular nation. E.g. Japanese stock market will use only the Japanese yen and Australian stock market will use only the Australian dollar. But forex trading lets you invest in various currencies and nations.
The stock exchanges don’t work on weekends and holidays and have fixed operating time. On the contrary, forex exchange is open throughout the day due to many countries who participate in forex trading. Purchasing and selling takes place throughout the world in various different time zones. When one market has closed, another one opens. This is the reality of the working of the forex market trading.