Extract from the currency trading book - by Mark Galant and Brian Dolan

What is currency trading ?

At its heart, currency trading is about speculating on the value of one currency versus another. The key words in that last sentence are speculating and currency. We think that looking at currency trading from those two angles - or two dimensions, if you allow us to get a little psychological - is essential.

On one hand, it's speculation, pure and simple just like buying an individual stock, or any other financial security, in the hope that it will make a profitable return. On the other hand, the securities you're speculating with are currencies of various countries. Viewed seperately, that means that currency trading is both about the dynamics and market speculation, or trading and the factors that affect the value of currencies. Put them together and you've got the largest and most dynamic and exciting financial market in the world.