24-hour Price Action
The Forex market has true, 24-hour price action allowing you to trade or move in or out of positions virtually any time of the day or night. As such you can often get a jump on events or developments before equity/bond and commodity traders.
Liquidity
Key to any efficient market is high liquidity. After all, as a trader, you want to know that you have an active market with plenty of buyers and sellers looking to participate. The Forex market is extremely liquid. You have $5 trillion per day that is transacted and this makes the market very efficient with tight, bid and ask spreads ina the various currency pairs. In contrast, compare this to average dollar volume on the NYSE of $150 bln per day and Nasdaq of about $150 bln per day and you see that there is a huge difference. The incredible amount of liquidity in the Forex market contributes to its integrity soundness.
Volatility
FX trading is centered around only eight major currencies. They are the most traded and they are (in no specific order) the U.S. dollar (USD), the Canadian dollar (CAD), the euro (EUR), the British pound (GBP), the Swiss franc (CHF), the New Zealand dollar (NZD), the Australian dollar (AUD) and the Japanese yen (JPY). The high volume and liquidity combined with fewer active instruments generates greater intra-day volatility than the equity markets where hundreds of stocks are actively traded. It is this volatility that can be profitability exploited by Forex traders.
No commissions/Low transaction costs
In Forex, typically the cost for a transaction is built into the price, unlike equities or futures, where a commission is charged. This is called the spread. The spread is the difference between the buying and selling price. Currency trading offers spreads that are much lower than what can be obtained when buying or selling equities, especially during after-hours trading.
Margin-based leverage
Leverage—or margin based trading—makes it possible for FX market participants to submit trades valued considerably higher than the deposits in their trading accounts.
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