A Structural Analysis of the Forex Market – How the Market Works?

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In case you happen to initiate a conversation with your friends and family member about trade markets, they would automatically assume that you are talking about the Stock Market.

When it comes to Forex vs Stock Market, they have very different structures. Let us have an elaborate look at how the Forex Market structure differs from that of the Stock Market and what are the benefits and drawback of each of the two markets.

The Centralized Market

There is a “Central” medium of operation in the centralized markets.

Every order that is placed in the centralized market must go through its housing exchange for it to be executed irrespective of the size of the company, or whether you are deciding to open a long or a short position. No matter if you are a small retail trader with limited resources or a large multi-national company with a far-reaching hand, you need to deal with the housing exchange to make transactions in the Centralized market.

All transactions are handled via the central exchange.


The potential to Track Transactions

One of the best advantages of a centralized market is that it allows you to track your order and their volume with extreme precision at any given point in time.

This unique feature lets the centralized markets to produce precise statistical data of all the transactions that go via the central hub to the respective participants of the Forex Market.

The Stock market is capable of producing accurate data on the volume of the transactions which is not possible for the Foreign Exchange market.


The Central Hub Controls Everything.

Restricted Timings

The Decentralized Market

Market Structure