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Forex Trading - An Introduction To Foreign Exchange

Any ambitious businessman will know that being a full time financial trader comprises of all the woes and joys of every other 9 to 5 job, and then some.

While there are ups and down in the finance market, the unpredictability and the satisfaction gained from making big wins on a particular day can rarely be experienced in a monotonous job at the office. This aspect coupled with the fact that it is certainly possible to become rich overnight if you happen to make the right investments has resulted in a lot of traffic in financial markets lately. One of the types of trading that has gained the favorability of several traders is forex trading. Forex trading short for foreign exchange trading (sometimes referred to as currency trading ) is the process of exchanging various types of currencies to eventually garner profits from changes in value.

Several billions of dollars in an assortment of currencies are being traded this very minute, thus forex trading takes place in the largest market in the world. The versatility and convenience that forex trading provides makes it a haven for the lazy trader looking to derive profits by exchanging currency from the comfort of his home. Thus, forex (or currency) trading is quickly becoming the preferred choice for traders over conventional share trading.

The hype behind forex is blatantly apparent with numerous websites endorsing different trading platforms. Any individual with insufficient experience in the world of trading can quickly grasp the concept due to the user friendly guides and explanations provided by platforms that are available today. Demo accounts are available to experiment with forex trading using virtual currency. These demo accounts and markets are fairly similar to real world markets thus with adequate experimenting, it is possible to gain a good feel of the system without risking a penny.

Forex trading is particularly convenient due to the fact that the market is available for trading 24 hours a day. This provides flexibility to traders in comparison to share trading. Forex (or currency) trading is primarily measured using pips which are the equivalent of a very small value of a particular currency (such as 0.0001). The pips are measured relative to two currencies such as 1.0624 AUD/USD. This reduces the risk involved with forex trading (high liquidity) and thus makes it an ideal place to start for a newbie trader.