Quiz error regarding forex trading vs stock market

There is a mistake in one quiz regarding the forex market vs the stock market.

The question is: Q: Which of the following is NOT an advantage of the forex market over the stock market?

The variants are:

  • Short selling without an uptick

  • Large commissions

  • 24-hour market

The right answer is large commissions but it doesn’t make any sense. The forex market has lower commissions if any at all. The question was about which of the following is NOT an advantage.

The answer also says: Most forex brokers charge no commission or additional transactions fees to trade currencies online or over the phone. Combined with the tight, consistent, and fully transparent spread, forex trading costs are lower than those of any other market.

So how is that not an advantage?

Motoras

If you read the question carefully it is comparing the Forex market with the stock market. The stock market has an uptick rule. The stock market is not a 24 hour market. The final key to the answer is that the stock market charges much larger commissions than the Forex market, so that would not be an advantage to the Forex market. Hope the explanation clears this up for you!

1 Like

Piprookie,

I still don’t get it. The question was about which is NOT an advantage of the Forex market when compared to the stock market. Now, there was a table in which it was specified which had the advantages.

ADVANTAGES FOREX STOCKS
24-Hour Trading YES No
Minimal or no Commission YES No
Instant Execution of Market Orders YES No
Short-selling without an Uptick YES No
No Middlemen YES No
No Market Manipulation YES No

So, in the second row, we have Minimal or no Commission as an advantage of the forex market against the stock market.

How is that… man… I just reread. The question is twisted. Now I got it. But, really, this is a dumb way of asking questions. At least for me.

So, large commissions are not an advantage of the forex market over the stock market because there are no commissions in the first place. The way I understood it was by not having large commissions, since it is a false statement that forex market has large commissions, it would be an advantage.

What I find wrong with the way of formulating this question is that it made me think about what the forex maket had, not about what it didn’t have. If you ask what is NOT an advantage, you would think about what are the weak points or disadvantages that the forex market has, not what WOULD not be a disadvantage.

The question is about what is NOT an advantage, so it asks about something that is out there, not something that there even isn’t in the first place. It doesn’t have large commissions in the first place.

The answer was more like a fake statement put out there to be obvious that didn’t fit the other variants. On the other hand, the way I understood the question was to think about which were the advantages of the forex market against the stock market, and since the stock market had higher commissions and forex market lower ones, it didn’t make sense to me. I understand the way of the question was thought, put a totally fake obvious answer in there, but to me it’s just a dumb way to check what one’s learned.

Motoras

I can understand your frustration! As I was progressing through the school there were many topics that were totally confusing to me. When I answered the quiz, my score was quite low. I am lucky I made it to the end!