Stock Market
Definition: A decentralized marketplace where publicly traded companies issue and sell shares of their ownership to raise capital.
Participants: Companies, investors (individuals and institutions), brokers, and exchanges
Traded instruments: Shares of company ownership (equities)
Objective: To provide companies with access to capital and investors with the potential for returns on their investments
Regulation: Governed by national and international regulatory bodies (e.g., SEC, FCA)
Trading hours: Typically open during business hours on weekdays
Returns: Can vary significantly based on company performance, market conditions, and investment horizon
Forex Market
Definition: A global over-the-counter market for exchanging currencies.
Participants: Banks, financial institutions, corporations, and individual traders
Traded instruments: Currencies from various countries
Objective: To facilitate international trade, investment, and other financial transactions
Regulation: Largely unregulated, but some countries impose specific requirements on participants
Trading hours: 24/7, five days a week
Returns: Determined by changes in currency exchange rates, which are influenced by economic factors and market sentiment
Key Differences between Stock Market and Forex Market
| Feature | Stock Market | Forex Market |
|—|—|—|
| Traded instruments | Company shares | Currencies |
| Participants | Companies, investors | Banks, institutions, traders |
| Regulation | Governed by regulatory bodies | Largely unregulated |
| Trading hours | Business hours (weekdays) | 24/7 (five days a week) |
| Returns | Based on company performance and market conditions | Based on currency exchange rates |
| Volatility | Can be high depending on company-specific factors | Typically lower than stock market |
| Liquidity | Varies based on company and market | Generally high due to participation of large financial institutions |