FOREX Market vs Bond Market

Both the FOREX market and the bond market can provide you with some good opportunities as an investor. While they are both options for you to invest in, these markets are completely different. Here are a few things to consider about the FOREX market compared to the bond market. 


One key difference between these two types of markets is in the way that commissions are handled. When you work with a bond broker, you are going to have to pay commissions for every bond that you purchase. Whenever you make a trade in the FOREX market, you will not have to worry about any commissions. Instead, the brokers are compensated through the bid/ask spread on each trade. This allows you to take on more transactions without negatively impacting your returns.

Market Hours

Another big difference between these two markets is in when you can trade. With the bond market, you are only going to be able to trade during the regular business day. In most cases, this will be from 8:00 AM ET to 4:00 PM ET. In some cases, you will be able to trade bonds after hours but your opportunities are not as good. With the FOREX market, you will be able to trade anytime that you want. The only time that the market is closed is on the weekends. Other than that, you can trade 24 hours a day if you want.


The liquidity of these two markets is very different. Sometimes, it can be difficult to find a buyer or seller in the bond market. Because of this, there are large swings in value between bonds from time to time. With the FOREX market, this is never an issue. There are always traders that are in the market at any given time. With over $2 trillion a daily volume, a lot of trading is going on in this market.


When you get involved in these markets, the taxes will be handled differently. With bonds, you are going to receive regular interest payments from the bond issuer. This means that you will have to count this amount of money as regular income and pay taxes at your marginal tax rate. With the FOREX market, the taxes are handled differently. You will most likely be able to take advantage of paying the capital gains tax rate which is going to be less than your marginal tax rate in most cases.

Bear Markets

In a bear market, these two types of investments are going to act differently. In the bond market, there is really not a way to hedge against the value of your bonds decreasing. In the FOREX market, you will be able to place a short trade anytime that you want. This way, you will be able to profit from a bear market.

Analysis Overload

Typically, investors will have an easier time analyzing bonds than they will analyzing the FOREX market. With the FOREX market, there are countless indicators and systems that you can use to trade. Many times, this leads people to making bad decisions when it comes to trading.