The stock exchange is established in order to centralize whole market interests at one place for fair trading. There are five stock exchange in Japan and the listed companies' stocks are traded actively there every day. The companies who want to list in the exchange must apply for it and it would win the place to trade in the exchange after passing strict examinations.
What is stock trading?
The stocks are usually traded on the auction basis at the exchange. The biggest factor to decide the stock value is the earnings and the performance of the company. The expectation the profit by the company would be rising leads the stock prices to go up, while the expectation be declining leads it to go down. So most investors in the stock market are regarded to aim to find the enterprise whose stock prices seem to rise. If the corporate performance improves better than expected, the investors could get the additional dividend. Moreover, the investors can take more profit as capital gain by selling the stock when it rises higher than the price he obtained. It is, however, necessary to pay attention that the investors in the stock market would lose all the money when the company falls bankruptcy.
Difference between forex margin trading and stock trading
Some investors target the relative value of foreign currencies between two nations in the back of business trend and outlook in the forex margin trading, and others targets the prospect of the companies in the stock trading. The currency does not disappear as long as the relevant country goes alive, but the stocks may become just a paper scrap when the company goes bankrupt. Needless to say, forex trading is more stable to invest from a liquidity viewpoint.
OTC and Exchange traded
The forex market is based on the OTC trade. Here, OTC does not have the same way in the rules to trade of the stock exchange where all market investors should be centralized. OTC market has the particular practice and two parties are allowed to decide the various conditions by themselves like price, contract date and the settlement date. One of them has to quote the price with the bid rate and the offered rate, and another has to decide to buy or sell on the quotation if he needs.