Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Understanding The Difference Between Forex And The NYSE (Or: The Importance Of Understanding Forex)

Whether you invest a little or a lot, it is vital to have a firm understanding of your stock market options. Forex represents the global market, and it has a much higher trading capacity than the New York Stock Exchange (NYSE). At the same time, Forex can also be more volatile than the NYSE because it is linked to the currency of so many different countries.

Interestingly, the fluctuations of the global market have the ability to dramatically change the value of the stock that is sold via smaller exchanges such as the NYSE. For example, the recent financial crisis in China sent Wall Street into a panic on August 24, 2015, and stock prices plummeted to their lowest point in four years. Just one day later, China cut rates by a percentage of 0.25 to 0.50, and this allowed the NYSE to rebound.

The reality is that every major country has the ability to quickly change the status of trading worldwide. Therefore, even investors who are only interested in sticking with the NYSE need to remain up to date about each major Forex change.

What is the Difference between the NYSE and Forex?

The most obvious difference between these two major trading resources is that the NYSE is based on the U.S. and Forex is used globally. However, wise investors should also take a closer look at the financial capabilities and specific focal points of these two trading platforms.

Forex averages a daily turnover of $5.3 trillion. By comparison, the smaller NYSE only averages $50 billion per day. With this in mind, investors who wish to have a higher level of access to trading often choose Forex.

The NYSE is open Monday through Friday from 9:30 a.m. to 4 p.m., and it provides individuals and businesses with the opportunity to buy and sell stock from an enormous and diverse list of public traded companies. On the contrary, Forex is available 24/7, and there is no physical location where the trading takes place. Additionally, the Forex market is designed around exchanging currencies from different countries.

The 24-hour aspect of Forex makes it possible for currency rates to constantly fluctuate, and investors who are tuned into these changes can make several trades per day to maximize their earning potential. Because Forex is directly tied into the value of currency from nations worldwide, there can be major changes based on the actions of any large country. This is the reason that the market became so volatile after China's financial crisis began, and it is also the explanation for the U.S dollar jumping 1.4 percent on August 25 in response to China's decision to cut their rates.

How to Get Involved in Trading via Forex

As previously mentioned, Forex is a 24-hour market that is not encumbered by any physical trading locations. This means that anyone around the world who chooses to get involved in the Forex market has the ability to do so. There are numerous Forex trading sites, FXCM and available, which provide investors with access to everything from trades to the latest financial information.

Anyone who has the desire to learn more about Forex before they make a financial investment can utilize practice tools. is one of the most highly regarded currency exchange rate websites, and they enable users to keep a close eye on the value of every currency. It is also a good idea to ask the Forex trading site of your choice for access to a demo version of their software. This will enable you to practice making trades without actually spending any money.

How to Get Involved in Trading via the NYSE

Most people who invest in the stock market do so via a diversified portfolio such as a 401k. Anyone who wants to take a more active approach can makes trades three different ways: in person at the NYSE, online or by turning to an investment firm that handles all of the buying and selling for them.

Riding Out Market Fluctuations

In some cases, it is necessary to sell off a lot of your market assets, regardless of whether you are using Forex or the NYSE. However, investors need to have the ability to look at the big picture. Making trades several times per day based on fluctuations may keep you from temporarily losing a lot of money, but it can also put you in a bad position when currency or stocks make a big rebound.

Ultimately, the best way to get involved in trading is to educate yourself about the variations between each option so that you can make the right choice for your financial status and lifestyle. Next, it is wise to spend some time analyzing market trends from the last 12 months in order to develop a good understanding of how frequently your chosen currency or stocks fluctuate.

Once you are armed with all of this information, you will be able to make a more informed decision. Alternatively, you could work with a buyer if you want to take a more hands-off approach. There are pros and cons to every market and each trading approach, but a solid, well-executed plan may be able to help you turn a small investment into a big nest egg for retirement.