You may have read or heard the term forex trading and never been quite sure as to what it means.

If you were to learn that it’s the world’s largest single financial market, responsible for an estimated $3 trillion worth of trades a day, then you’ll soon see that it’s a big business.

It’s also a business which almost anyone can get in on, thanks to online trading.

For example, there have been some incredible stories of South Africans who have made fortunes from starting out with relatively modest investments, including Hoosain Harnekar.

In fact, he’s been so successful that he even features heavily in a leading forex investment “how to” book, Millionaire Traders: How Everyday People Are Beating Wall Street At Its Own Game.

Sure, not everyone is going to enjoy Hoosain’s level of success, but there are plenty of opportunities to make some money and it’s easier than ever before to get involved.

But before we talk about how, here’s a quick explanation of what forex trading is.

How it works

Just like when you travel overseas and convert cash you want to take with you from Rands into the currency of the country you’re visiting, and you have to find the best exchange rate, forex trading hinges on the fluctuations in the values between set pairs of currencies.

So, at its most basic, the idea is to invest in currencies whose value you believe will increase and can then sell at a time to make a profit.

It’s a system that’s been going on for as long there’s been currency to trade and today it is controlled, not by individual stock exchanges, but by a global network of banks in the four key centres – New York, London, Tokyo and Sydney.

In fact it’s the big international banks who are the really big players in the market, hoping to make money on currency fluctuations in the market. Governments also play the markets with the aim of controlling the flow of their currency and the economy in general.

How to start trading yourself

So how can an individual get involved and start to trade currency? Fortunately, along with so many other things in the world, the internet has come up with a simple solution and this is online trading.

Whereas previously it would have been vital to use the services of a live broker, now the process can be all done via a PC or smartphone using online broking services.

It’s true to say that it’s still quite a complicated area with lots of words you may not be familiar with – like pips, pairs and leverage – but all good online trading sites should have all the training and information resources you need to get started.

Many also offer the opportunity to find your feet using pretend money until you feel confident enough to do it for real. There are also plenty of other research resources online; for example, if you wanted to know more about the rand as a currency.

So, while it may not be for everybody, forex trading in South Africa has certainly never been easier. And, although you may not end up making Hoosain Harnekar’s millions, it could be a good way to get your money to work a little harder for you than putting in the bank – and who wouldn’t be interested in that?