When most people think about trading, they associate it with the trading of traditional stocks (or shares). This is natural, as the stock market often comes up in the news, and we've all seen or heard of such movies as The Wolf of Wall Street (starring Leonardo DiCaprio), Wall Street (featuring my favourite, Charlie Sheen!) or even Rogue Trader (with Ewan McGregor).

However, the trading of currencies is where it's at, primarily due to its daily trading volume, its longer market hours and the use of leverage - which can both magnify as well as reduce your potential for fast profits. Here are the top 5 reasons why currency trading - referred to as the forex (FOReign EXchange) - is the leading choice of most home-based traders:

1. Volume:
   The first advantage of the forex market compared with the stock market is the size of this market. The forex is estimated at just over $4.5 trillion of transactions each day, with the majority of transactions on the major currency pairs (with the EUR/USD leading bigtime); the stock market only represents around $90 billion of daily trading: do the math! Trading in a market with such a high daily trading volume can be a real advantage for traders, allowing them to instantly execute their buy and sell orders, and enter/exit the market quickly without waiting.
   
2. Market hours
   The forex market is simply the most heavily traded financial market in the world, well ahead of the equity market and stock market indices. Trading is facilitated by the interbank market, which means that it can take place anywhere and anytime regardless of the various banks' business hours. Therefore forex traders have access to the market virtually 24h/day, 5 days a week. The forex market has no trading restrictions, so you can enter and exit the market or modify a trade as you see fit. The forex market is very different from futures markets or equity markets, which are available only part of the day. In short, the forex market and its hours allow you to trade and make money whenever you want!
3. The cost of trading
   When you trade the forex, you won't be subjected to any trading commission fees. The cost of trading is simply found in the "spread" applied by forex brokers between the purchase price and the selling price of the market, a concept that is quite different from that of other financial markets (ex: you buy the EUR/USD currency pair at 1.0650 and sell it at 1.0648, therefore the spread is .0002, or "2 pips", which is very reasonable and represents a small fraction of what you stand to make from a successful trade). When you trade through a stock brokerage, you often have to pay hefty commissions in addition to the spread. The forex appears as a more transparent market, as your only trading cost is the spread. (A few brokers offer zero-spread trading but in this case they add a commission to each trade - this is just marketing, you're out-of-pocket cost is essentially the same!)
   
4. Leverage
   The use of "leverage" enables traders to increase their return on investment. With stocks, the maximum leverage is 2:1. When you trade the forex, you can benefit from leverage as high as 1000:1 (ex: trade the equivalent of $1000 with just $1). For example with a traditional broker if you invest £1,000 in the stock market with a leverage of 2:1 then you can buy up to £2,000 worth of shares. If you want to invest €1,000 in the forex market through a forex broker like HotForex (leverage x1000) then you can take up to €1,000,000 position in the currency market. The leverage you choose depends on your trading profile, it is an attractive factor of the forex market but it is also a risky component of trading: leverage can significantly increase your profits, but your losses also! Leverage has advantages and risks which must also be taken into account.
5. Accessibility (small investments possible)
   The minimum deposit required by forex brokers is relatively low, generally as little as €/£/$100 when opening a trading account; they know that the successful ones will eventually deposit larger amounts once they are confident in their system, while regular stock brokers often require a deposit of several thousand euros/dollars/pounds. Forex brokers offer the trading of instruments that are called "CFDs" (Contracts for Difference). These products are derivatives of underlying assets such as equities, indices, currencies, raw materials and commodities. CFDs allow profits to be indexed on the rise or fall of the price of a trading instrument without the need to hold ownership, thus requiring no large margin of capital in contrast to brokers that only specialise in the stock market. (Broker comparison here)