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Forex and Stock Markets


Forex market and stock market (stock and securities market) are two independent markets with no relation to each other. The difference between them is that at Forex market the currencies are being traded, and at stock market the stocks are bought and sold. Stock markets are often located at currency markets. The largest stock markets are situated in New York, London and Tokyo.


Another main difference between Forex and stock markets is the distinction of sums in which the trading is held. In order to buy shares at stock market a considerable capital is needed from $10 to over $100 thousand. At stock market, the trading is conducted at a more moderate and steady pace, unlike at Forex market, where within a short period of time it is possible either to earn a large capital or to sustain significant losses. Some traders having saved a convincing capital at Forex market skip to stock market further on.


In its turn, stock market is divided into primary and secondary markets.


The primary stock market plays an important role in the market economy of the country; the pace of its development and effectiveness depends on it to a great extent. Here, occurs placement of the security papers, issued for the first time. Securities' buyers at this market are as a rule individual and institutional (investment funds, insurance establishments and so on) investors. Securities at the primary market are placed by way of turning to investors directly and through intermediaries.


The secondary stock market includes off-the-board market and stock exchange. Here, the on-selling of issued papers and security papers to other investors takes place. Unlike the primary, the secondary market has no influence on the volume of the country's investments. The main participants at this market are the speculators, who buy securities at a low price and then sell them at a higher price.


One of the major regulators at stock market is a price. In its formation specialists, issue bodies, intermediaries and investors take part. The prices at stock market are formed in accordance with several principles: profitability of the papers, their directivity, lessening of their profit, and demand for investors, differences, decreasing or rising of their revenues. These principles get their realization through the strategies of price formation at stock market: to setup the initial high or low price, to gain the profit from selling quickly, to enter the market and to own part of the market.


The work with stocks can be held in different directions. The stocks are bought for: the profit in the form of their rate differences, getting dividends etc. In spite of stability and security of stock market, before starting to work at it, the analysis is made which is targeted to minimize the investment risks.

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