Forex Trading And Financial Stability Oversight Council (fsoc): Legal Aspects In Las Vegas – Forex (foreign exchange) and stock markets are two of the largest financial markets in the world that offer both individual traders and institutions the opportunity to buy, sell and trade all types of assets. Often discussed hand in hand, there are some key differences between forex and the stock market that new traders should consider before settling for one or the other.

In this guide, we look at some of their differences and compare the two markets in terms of factors such as trading volume, liquidity and leverage.

Forex Trading And Financial Stability Oversight Council (fsoc): Legal Aspects In Las Vegas

Forex Trading And Financial Stability Oversight Council (fsoc): Legal Aspects In Las Vegas

OANDA Corporation is regulated by the CFTC/NFA. OANDA is a member organization of NFA (Member ID: 0325821). CFDs are not available to residents of the United States.

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OANDA Corporation is a member of the NFA and subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority under or spot virtual currency products or transactions or virtual currency exchanges, marks.

Trading in digital assets, including cryptocurrencies, is particularly risky and is only for individuals with a high risk tolerance and financial ability to withstand losses. OANDA Corporation is not a party to any transaction in Digital Assets and does not hold Digital Assets on your behalf. All digital asset transactions take place on the Paxos Trust Company Exchange. Any positions in digital assets are held exclusively with Paxos and held in an account in your name outside of OANDA Corporation. Digital assets held by Paxos are not protected by SIPC. Paxos is not an NFA member and is not subject to NFA’s regulatory oversight and examinations.

Leveraged trading in foreign exchange contracts or other off-exchange products on margin carries a high level of risk and is not suitable for everyone. We advise you to carefully consider whether trading is suitable for you based on your individual circumstances. You can lose more than you invest. The information on this website is general in nature. We recommend that you seek independent financial advice and ensure that you fully understand the risks involved before trading. Trading through online platforms carries additional risks.

Forex has largely outperformed the stock market. For example, a comparison of trading volumes shows that a daily volume in a stock is equivalent to just one hour of forex trading.

Forex Vs. Stock Market — How Do They Differ?

To be more precise, the average daily trading volume in forex is about $6.5 trillion (even higher at $7.5 trillion in April 2022), that is, $250 billion per hour, the figure achieved by stocks at the end of each trading day.

Many see the high trading volume as a major advantage, making forex a more attractive financial market. Others, on the other hand, prefer the diversification offered by the stock market, where thousands of existing and emerging stocks open up many trading possibilities.

High trading volume means high liquidity. While it is true that fluctuations in a country’s currency supply can affect forex currency pairs, it is virtually always the case that there is a large amount of currency available for buying and selling. However, the same cannot be said for all company stocks.

Forex Trading And Financial Stability Oversight Council (fsoc): Legal Aspects In Las Vegas

To illustrate this point, we can imagine a purchase involving 1,000 shares of a stock. If the company whose shares we are buying is small, such a purchase can significantly affect their share prices. On the other hand, we can engage in transactions of, for example, tens or hundreds of millions of dollars without affecting the market price of the currency at all.

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High liquidity in forex means that buyers and sellers can exit their positions more easily, as new traders are always ready to take their positions. On the stock market, the same can be said for large, well-established companies with high trading volumes, such as Apple (AAPL).

Market volatility, or price fluctuations, can be both beneficial and detrimental to traders. In Forex, short-term traders who open and close their trading positions quickly can take advantage of increased market volatility to profit from rapid price movements.

In the stock market, many traders prefer to buy and hold their shares, especially those investing in blue chip stocks, that is, shares issued by companies that contribute to their long-term stability.

Forex and stock markets are very different in terms of their market timing. Stock markets have specific trading hours which usually close at 4 PM. On the other hand, the forex market operates 24 hours a day. This is made possible by different international time zones. That is, all transactions are conducted through four global sessions in London, New York, Tokyo and Sydney. When one of them closes, the other opens, allowing the trade flow to continue.

Regulated Forex Brokers

Stock or forex markets are not open seven days a week, as they are closed on weekends.

While forex is open continuously, it does not mean that trading activity remains constant across the board. It usually peaks when more than one session is active.

In short, leverage gives traders the opportunity to borrow money and thus increase their trade size relative to their available funds. The higher the leverage, the more borrowers can borrow. In turn, greater benefits lead to greater profits, but they also come with more significant risks.

Forex Trading And Financial Stability Oversight Council (fsoc): Legal Aspects In Las Vegas

As a rule, leverages on the forex market are high, with some brokers like OANDA offering rations of up to 50:1. In the stock market, traders typically have a leverage ratio of 2:1 (ie, they can enter a position with twice the amount of funds in their account). Leverages may be higher for traders who meet certain requirements, for example, those whose balances exceed a certain limit and who trade within a certain period.

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Before opening a trade, users must set aside a portion of their trading position as collateral, such as a deposit that will cover some of the risks and losses the broker may face. This is called the margin.

In general, the forex market offers lower margin rates than the stock market. In fact, even 1% margin rates are not unheard of.

When trading stocks, however, initial margin rates can range between 20% and 50%. Additionally, traders have to pay margin interest rates on the funds they borrow. Rates vary depending on the broker and usually depend on the amount of money borrowed.

Given all the differences between the forex and stock market discussed above, it is challenging to give a definitive answer as to which is more profitable. The optimal choice depends on each trader’s needs and risk tolerance.

Financial Strength & Security

For traders looking to make quick profits and capitalize on asset volatility, short-term trading strategies on the forex market can be a great option, especially for more experienced traders. For those looking for a more stable approach, a buy-and-hold strategy in the stock market may be more appropriate.

Of course, no trading decision or investment can be made based on a single factor. Extensive research, planning and risk management are essential for investing to prove fruitful, be it forex or the stock market. Several federal and self-regulatory agencies work together to increase transparency and efficiency in markets. These regulators have a panoramic view of the entire market including futures, options, stocks, bonds, commodities and forex.

Apart from monitoring the transactions and important decisions of all stock brokers, bankers, dealers, insurance agents etc. working in the industry, these agencies also investigate the internal workings of financial companies.

Forex Trading And Financial Stability Oversight Council (fsoc): Legal Aspects In Las Vegas

For such cases, mobile and other electronic communications, the main source of truth, must be protected and maintained by all regulated companies for a specified period. Failure to do so or employees using private, unsecured BYOD phones, networks, social media accounts or email to communicate with clients can result in hefty fines from regulators.

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Therefore, it is mission-critical for financial firms to create archival solutions to assist with regulatory inspections, e-discovery during trials, and even audits.

While most regulators have overlapping requirements regarding call recording and text message retention, some major differences exist in each agency’s mandate, depending on the financial instrument, market and business involved.

Among the ranks of financial regulators, the SEC, CFTC, FINRA, and NFA are the major regulatory agencies overseeing the US securities markets. They have powers and authority to control registered financial institutions to meet key regulatory objectives. One of their primary objectives is that financial market participants have confidence in its integrity and that markets operate efficiently with maximum buyers and sellers, liquidity, low costs and volatility.

Many other regulators regulate separate financial markets in the USA. The following is a list of regulators that regulate each financial market sector.

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Since its establishment in 1974, the Commodity Futures Trading Commission has served as an independent agency regulating the US derivatives market.

The agency ensures that swaps, futures contracts, forex and options are traded in the market without fraud or manipulation.

To stabilize the financial markets, the CFTC introduced the Dodd-Frank Act, which required companies operating in the swaps market to record calls.

Forex Trading And Financial Stability Oversight Council (fsoc): Legal Aspects In Las Vegas

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