Forex 101 • Global English Guide
What Is Forex? A Beginner’s Guide to Forex Trading
Forex (foreign exchange, or FX) is the global market where currencies are traded. Traders exchange one currency for another and may speculate on exchange-rate changes. Forex is one of the world’s most liquid markets and runs 24 hours a day, five days a week.
CFDs and Forex trading involve risk. This page is for education only and does not provide financial advice.
What Is Forex Trading?
Forex trading is the act of buying one currency while selling another as a pair (for example, EUR/USD). The first currency is the base, and the second is the quote.
Simple example
If you buy EUR/USD, you’re buying euros and selling US dollars. If EUR/USD rises, the position gains value; if it falls, it loses value.
How Does Forex Work?
The Forex market is decentralised, meaning trades occur through a global network rather than one central exchange. Retail traders typically access Forex through brokers using platforms like MT4/MT5 or web/mobile trading platforms.
- Prices move due to supply and demand, macro news, interest rates, and market sentiment.
- Major pairs are generally more liquid, often resulting in tighter spreads.
- Execution quality and costs vary across brokers, so choosing wisely matters.
Next step: compare brokers before you deposit any money.
View 2026 Top Forex Brokers →Forex Market Hours Explained
Forex runs 24/5 across four major trading sessions. Activity often increases when sessions overlap.
| Session | Key Centres | Typical Notes |
|---|---|---|
| Sydney | Australia | Often calmer; can set early tone. |
| Tokyo | Japan | JPY pairs often see more activity. |
| London | UK / Europe | High liquidity; major pairs often move more. |
| New York | USA | USD pairs remain active; key US data releases. |
Tip: Many traders watch the London–New York overlap for higher liquidity.
Currency Pairs Explained
Currency pairs show the value of one currency relative to another. They’re often grouped into majors, minors, and exotics.
Majors
Highly traded and often more liquid.
Examples: EUR/USD, GBP/USD, USD/JPY
Minors
Major currencies without USD.
Examples: EUR/GBP, AUD/JPY
Exotics
One major + developing-market currency.
Examples: USD/TRY, EUR/ZAR
Beginner-friendly pairs (common starting point)
| Pair | Why beginners often start here |
|---|---|
| EUR/USD | Very liquid; typically tight spreads; plenty of educational material. |
| USD/JPY | Widely traded; often cleaner technical structure for practice. |
| GBP/USD | More volatile; useful for learning how news impacts price. |
| AUD/USD | Often moves with macro themes; good for learning fundamentals. |
Note: volatility and costs vary by broker, account type, and market conditions.
Why Do People Trade Forex?
- Liquidity: major pairs can be easier to enter and exit under normal conditions.
- Accessibility: platforms are widely available on desktop and mobile.
- Global drivers: interest rates, inflation, and geopolitical events create movement.
- Flexible timing: 24/5 market access across global sessions.
Don’t pick a broker blindly
Costs, platform stability, and regulations vary. Compare first, then open an account.
Is Forex Trading Safe?
Forex trading carries risk, especially when leverage is used. Safety comes from education, risk controls, and choosing reputable, regulated brokers.
- Start with a demo account until your process is consistent.
- Use conservative position sizing and define a maximum loss per trade.
- Use stop-loss orders where appropriate and avoid emotional decisions.
How to Start Forex Trading as a Beginner
- Learn basics: pairs, spreads, leverage, and order types.
- Compare brokers: regulation, costs, execution, platform, support.
- Demo first: practise the platform and risk management.
- Create a simple plan: time, pair selection, rules, risk limits.
- Go live carefully: start small and track outcomes.
Common Beginner Mistakes
Too much leverage
Large exposure can magnify losses quickly.
No risk plan
Without limits, one trade can derail progress.
Random trading
Consistency beats constant switching and guessing.
Forex vs Stocks vs Crypto
| Market | Trading hours | Volatility | Notes |
|---|---|---|---|
| Forex | 24/5 | Medium (pair-dependent) | Macro-driven; high liquidity on majors. |
| Stocks | Exchange hours | Medium | Earnings and company fundamentals matter. |
| Crypto | 24/7 | High | Can be more volatile; structure varies by venue. |
FAQ
What is the main purpose of the Forex market?
Forex exists to facilitate currency exchange for global trade and business. It also helps participants manage currency risk and respond to macroeconomic changes.
Who are the biggest players in Forex?
Major players include central banks, commercial banks, large institutions, and corporations. Retail traders participate through brokers using online platforms.
Why do exchange rates move so quickly?
Prices shift as the market reacts to news, economic data, policy expectations, and sentiment. Liquidity can change around major announcements, increasing volatility.
Is Forex trading only speculation?
No. Many participants use Forex for hedging and operational needs, such as paying overseas suppliers or managing future currency exposure.
What is “spread” in Forex?
The spread is the difference between the buy and sell price. It’s a common trading cost and can vary by pair, broker, account type, and market conditions.
What is “margin” and why does it matter?
Margin is the deposit required to open a leveraged position. If losses grow, margin levels can fall and positions may be reduced or closed depending on broker rules.
Do I need to watch charts all day to trade Forex?
Not necessarily. Some traders use longer timeframes and check markets at set times. The right approach depends on your strategy and schedule.
What should I check before choosing a broker?
Look at regulation, trading costs, platform stability, execution quality, deposit/withdrawal methods, and customer support. Comparing brokers helps avoid poor matches.
Can I learn Forex without risking money?
Yes. Demo accounts and educational resources allow you to practise without real funds. Many beginners use demo trading to build routine and discipline first.
What’s a sensible first step after reading this guide?
Compare regulated brokers and start with a demo account. Once you understand costs and platform basics, you can transition to live trading cautiously.
Risk warning: Forex/CFDs are complex instruments and come with a high risk of losing money. This content is educational and not financial advice.
Next step: compare brokers, then start small
If you’re serious about learning Forex, compare your broker options first. Platform stability and costs matter more than hype.
Last updated: 2026