Before we go to the point, one must have a clear understanding what currency trading or forex trading is all about. Forex, short for foreign exchange, is basically trading one currency for another for profit. That's one simple way of putting it, but forex is not just about currency conversion.

In a more technical definition, forex is a worldwide decentralized over-the-counter financial market for the trading of currencies, wherein financial centers around the globe serves as anchors of trading between a wide range of different types of buyers and sellers 24 hours a day, five days a week (The Economist's Guide to Financial Markets). The point is forex trading can happen anywhere and anytime, and can be done by anyone. Anyone, like the Australia online shopper, can profit from it even without formally engaging in forex trading. There's a lot of free forex materials on the web such as the free forex ebook given by GO Markets.

The point mentioned above leads us to how Australians can take advantage of forex trading thanks to a stronger Australian currency. As of 2011, Australia is fast-gaining a reputation as a global hub for online shopping. No less than US giant internet retailer eBay through its CEO John Donahoe alluded to the Aussie market as "a viable and standout business consideration for web retailers." According to an IBTimes report, Australians shop online for more convenience and savings.

RELATED: "Australian online retail industry poised to further grow in 2011, says eBay"

When Aussies do some online shopping, they freely use their local currency, the Australian dollar. It is the fifth most traded currency in the world, a fact which allows them to purchase goods on the internet without converting to the US dollar. This just means that the Aussie dollar is widely -accepted by online retailers. Because of this, experts predict that the recent strength of the AUD will boost the online expenditures through year 2011. How so? A stronger Aussie dollar would give Australian shoppers more purchase power as the value of their currency rises up against the dollar.

Basically, a currency rises up against another when there is greater demand for such currency i.e. online retailers selling their products in Aussie dollar or the markets has a stronger demand on Australian goods which they could only buy using the local currency. But determining the exchange rate is much more complicated than that.

But the thing is, as the Aussie dollar gets stronger against the US dollar, Australian consumers can now buy more goods and services sold in US dollar. And that's where the internet comes in! Of course, when you are a retailer based on Australia, you would sell your good in the local currency as it is the legal tender in the country. Here's the explanation:

Before online shopping was possible, Aussie consumers have no choice but to buy a particular good and service in the Australian dollar. An Aussie who wants to buy the entry-level Wi-Fi 16GB model iPad2 has to pay AUD$579. This gives the local retailers the leverage of enjoying the difference in the exchange rate. For example, the exchang rate is 2:1, meaning an Aussie has to have AUD$2 to purchase a good worth USD$1. Suppose the Aussie dollar got stronger against the dollar, and the exchange rate went to 1.5:1. This means an Aussie just need AUD$1.5 to avail of goods worth $1. Applying it to the example of the iPad2, if an Aussie bought an iPad2 for $579 and the Aussie dollar got stronger, it would mean that the local retailer from which the Aussie bought the iPad will be needing less capital (less than 25%) to purchase another stock, and in the process profit more.

Thankfully that's not the case now. Aussie consumers can now take advantage of the stronger Aussie dollar themselves by shopping online. Goods like iPad2 from the US now cost less than it did so before the advent of a stronger dollar. At present, Australians are buying more books, CDs, electronics, gift and clothing online along with computers, laptops, and cameras which are popular items because of their higher price points i.e. higher demand, and are not subject to import tax. It's a plus now that online payment modes from the likes of eBay and Google facilitate online transaction at less cost now.

But that's just one way of profiting from forex. Another way is to actually trade currencies for the purpose of profit. Like shopping, there's online forex trading, too. If you are interested to learn more you can avail of the free forex ebook Introduction to Foreign Exchange offered by GO Markets by signing up here.

Visit us regularly for more forex trading tips and news. Along the way you might encounter technical terms on forex trading. Our free forex education section offers free and accessible materials that explains them.