The forex and equities markets are the two biggest financial marketplaces in the world.

Traders and investors must decide which suits them best. Maybe both?

But they are different, and your decision should be based on your trading strategy, style, and appetite for risk.

In this article, FXChoice compares them, allowing you to understand the differences and decide which is best for you.

How is trading forex and equities different?

Firstly, you are trading different things or Securities. Forex is the market for currencies. In comparison, the equities market is a stock market – often a stock exchange – dealing in shares, which are parts of company ownership.

The main reason to choose one over the other should be your preference for dealing in countries’ currencies or the shares of a company.

The trading of each asset is different. There are advantages and disadvantages to each.

Forex Equities
When can you trade forex?
As forex is genuinely a global market, you can trade 24/5, providing ample opportunities for trading. The best time to trade forex is when the market is most active, usually when two sessions overlap, as there will be a higher number of buyers and sellers. For example, if you were interested in GBPUSD, London and New York trading hours overlap from 12 to 4 pm (London time). The increased liquidity will speed up transactions and even lower spread costs. The London opening at around 7 am is another highly liquid time of day, as London remains the global center for forex trading.
When can you trade equities?

Equities trading is different, as it is often limited to the opening hours of whichever exchange the shares are listed. However, increasingly extended hours are offered to traders today, which means you can act quickly on breaking news, even when the market is closed. The equity trading day is getting longer for most big stock exchanges. The increasing popularity of equity Contracts for Difference (CFDs) has helped lengthen the liquid trading part of the day.

What moves forex?
What makes currency prices fluctuate is diverse and complex. You generally need to consider the macroeconomics of the country – for example, unemployment, inflation, GDP, news, and political events. And because you are buying one currency while selling another, you need to be aware of the performance of not just one economy but two.
What moves equities? 

When trading equities, you must concentrate on a few factors that directly impact your chosen company – including the company’s debt levels, cash flows, and earnings – as well as economic data, news reports and sector health, and the state of the overall stock market indices.

Forex liquidity 

Forex is the largest and most popular financial market globally, which means it is incredibly liquid and frequently sees a daily turnover of trillions of dollars. Liquidity can change throughout the day as different sessions open and close around the world. As a result, liquidity also varies greatly depending on which pair you choose to trade.

Equities liquidity
The equities market sees fewer trades per day than forex, but shares are still easy to trade. Large, popular stocks – such as Apple, Microsoft, or Facebook – are the most liquid as there are usually willing buyers and sellers. Once you move away from blue chips, there is often significantly less liquidity.
Forex volatility 

The ease at which forex can be traded makes it highly volatile. Though the market will usually trade within a small range, the vast number of trades taking place can cause prices to change very quickly. When trading forex, it is vital to keep up with political, economic, and social events. The market is prone to sudden and drastic movements in response to these announcements. The forex market is a very emotional place.

Equities volatility
Equities tend to have more stable price patterns. But, like forex, it can see periods of volatility and is especially sensitive to domestic politics. Trading volatility can potentially provide many opportunities for traders to profit, but it also comes with increased risk, making it essential to take steps to prevent unnecessary loss.
Forex leverage
Though it can be an advantage of both equities and forex, it is a feature of currency trading. Forex traders usually have a much larger leverage ratio; at FXChoice it is as high as 1:200. But leverage is a double-edged sword: though it can magnify returns, it can also magnify losses.
Equities leverage
Leveraged trading enables you to gain exposure to markets with just a fraction of the capital customarily required if you buy a stock.FXChoice offers leveraged CFDs for equities, enabling traders to access these markets, but with a substantially lower leverage when compared with forex.
Long or Short in forex
Since forex trading involves two positions – buying one currency and selling another, traders have always participated in falling and rising markets.
Long or Short in equities
When investing in equities, you traditionally only take a long position, as you would be looking to profit from any future increase in the value of a company’s stock. But thanks to derivative products, such as CFDs, you can go long and short on company shares – giving you equal access to trading opportunities whatever the market’s future direction.

Forex or Equities?

When deciding whether to trade forex or equities, there is no correct answer because there are benefits and drawbacks to each.

Ultimately, your decision will come down to your personal preferences and attitude toward risk.

You need to take into consideration your trading style and financial goals. If you are interested in a fast-paced environment, forex provides excellent opportunities for short-term traders.

If you’re looking to take advantage of short-to-mid-term trends or less volatility, or you are an investor, the equities market could be for you.