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Definition: Currency Trading

Currency trading, also known as “forex trading,” experienced phenomenal growth in the late nineties as more and more traders discovered the advantages that currencies have over stocks.

Trading currencies involves the exchange of one currency for another; for example, US Dollars for Euros. Currencies trade in pairs and a trader buys the currency that he thinks will appreciate in value relative to the other.

When looking at a platform to trade currencies, the similarities with a stock trading platform are striking. Consequently, a stock  trader can easily learn how to use a platform to trade currencies. Since there are only a few major currencies to trade (versus tens of thousands of stocks), it is a lot easier for a beginning trader to focus on a few pairs. The ability to trade currencies 24-hours a day (from Sunday afternoon to Friday afternoon), flexible leverage, and difficulty to manipulate the market, are just some of the many advantages that are rapidly making currencies one of the day trading vehicles of choice for the 21st century.

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