Foreign exchange market is different from the stock

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More concentration
Whereas on various stock exchanges around the world there are 100s of large companies with shares that are very liquid, think S&P 500 (500 largest listed US companies) or FTSE 100 there are only three major currency pairs where most of the action takes place in forex: EUR/USD, USD/JPY and GBP/USD. USD/CAD, AUD/USD and USD/CHY are also very important pairs. Spreads, the difference between buy and sell prices, on these major pairs are the narrowest and hence the most suitable for day traders and scalpers as the transaction costs are lowest. However, for longer term traders interesting opportunities can develop around more exotic currencies such as NOK, SEK, SGD and NZD. However, spreads will be wider on pairs involving 'exotics' as liquidity is much lower.
This concentration on a few currency pairs gives traders the advantage of being able to specialise. So for instance, some will only trade EUR/USD or GBP/USD and become very expert on just one of those pairs. Stock market traders can decide to specialise just in a few very liquid stocks such as Coca Cola or Vodafone. However, those strategies also typically involve having to monitor the major equity indexes, such as the S&P 500 or Dow Jones in the US or the FTSE 100 in the UK, which makes the set-up a little more complicated. Others can simply chose to chase the momentum stocks of the moment, which means searching among 1,000s of listed stocks. There are software programmes that can locate those fast moving shares, but a lack of specialisation in those stocks can leave traders open to making losses.

Foreign exchange market is different from the stock

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