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Chapter 2, Part II. And what about the stock market? Page 4

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 14, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    MYTH #6 FOREX is 24-hour market but the stock market is not.

    True

    We’ve talked about it already in previous chapter. NYSE, for example has strict trading session time, that starts in 8:30 Chicago time and closes at 15:00. There are some limited ways to trade stocks after hours, but these have issues with liquidity.​

    MYTH #7 Market Orders on FOREX have Instant Execution.

    Partially True

    I’m not totally agreeing with this, because there is a major difference between trading shares and FOREX. When you are buying or selling even single stock, your order is transferred by the broker to the exchange directly, and after your transaction, the shares really change their owner. This procedure demands time, and during non-normal trading environment (for example during some breaking news release) the filling of orders when their flow to exchange becomes really big, can lead to slippage and delay in execution.

    On the FOREX market, the situation is a bit different. First of all, it’s much bigger, so there is a much greater flow of orders needed to lead to slippage in execution. It means that simple individual may do not see any skewing delay or spread widening in quotes, but some bank that trades with large bank definitely will see it. Second, not every transaction that is made by individual is transferred to the real market and leads to direct currency exchange. The conclusion is as follows – FOREX also has slippage, delays in quoting and widening of spread, but usually when trading volumes are really big and on transactions that are made directly on the market with real currency delivery. These divergences may not have impact on public, but sometimes they do, when the trading environment is strongly stressed. But anyway this happens much rarely than with the stock market, as long as you have a good forex broker and a fast internet connection.​
     
    #1 Sive Morten, Dec 14, 2013
    Lasted edited by : Feb 5, 2016
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