Many reasons exist why the foreign exchange market is such a distinctive financial market and many seem to be positive that also act as advantages of Forex trading.
The currency market is very large with a $4 trillion average daily trading volume. This acts being an advantage to currency traders since greater volume means better fills in your trades (meaning less slippage). Slippage simply refers back to the difference between a market price before and after putting in an order - you can decide to buy at one price but usually purchase at another when an order has actually completed. This really is because of slippage (usually occurring in highly volatile markets). The greater the volume each and every individual price level, the greater the fills are. Due to the large trading volumes, the FX market can provide less slippage than any other financial market, meaning less real trading costs.
Not just would be the fills better within the foreign exchange market, but the spreads will also be less costly. Also, you pay zero commissions since you technically visit a dealer and not a broker. You do business with the marketplace makers directly rather than via a broker, meaning you can save lots of money. However, remember that lots of online Forex brokers will call themselves brokers, however they technically aren't brokers whatsoever.
The foreign exchange market is also very convenient as possible trade 24 hours a day, rather than 6.5 hours each day using the stock exchange, both excluding weekends. This means that you are able to select the right time to trade for you personally and you will really focus on your trading. Also if you need to, you are able to trade currencies as the news and announcements are freed, that you simply cannot do when trading in the stock exchange.
In the FX market, there's also no restrictions on short selling. They have a tendency to really make it hard to short sell in the stock exchange given that they want stocks to rise and not fall. However, there aren't any restrictions with regards to short selling within the Currency markets. You are able to short just as easily as you can buy currencies in the currency market and also the fills are simply as quick. It's also wise to remember that when trading currencies, you are technically going long in a single currency and short in another since you do business with currency pairs.
The currency market can also be highly liquid and may provide high leverage. This means that currencies tend to be price stable and slip minimally with narrow spreads and high liquidity. High leverage, starting at least of 100:1, implies that you can make larger profit/loss margins with merely a really small initial deposit - you should try to work this to your benefit. Do bear in mind that different countries may have different limits around the amount of leverage open to traders and investors.
In conclusion, there are lots of benefits of trading in the Currency markets. Greater volume means less slippage, you have to pay no commissions meaning less trading costs, you can trade 24 hours a day meaning more convenience, there are no restrictions on short selling meaning more freedom, the market is highly liquid meaning again less slippage and much more stable prices and high leverage meaning larger margins.