Getting Started with Forex Trading
This beginner-friendly guide explains how forex works, what you actually trade, and how to place your first trade responsibly.
Table of contents
1) What is forex?
Forex (FX) is the global market for exchanging currencies. You trade currency pairs like EUR/USD, which represents the value of one currency relative to another.
- When EUR/USD rises, the euro strengthens vs the US dollar.
- When EUR/USD falls, the US dollar strengthens vs the euro.
2) Core terms
Currency pair
Two currencies quoted together (base/quote). Example: EUR/USD.
Pip
A small unit of price movement. For most pairs, 1 pip = 0.0001.
Spread
The difference between bid and ask; a key trading cost.
Lot size
Your trade size. Many platforms offer micro/mini/standard lots.
3) How a trade works
Most beginners start with two order types: market orders (execute now) and limit/stop orders (execute later at a specific price). Always know your invalidation point before entering.
- Use a stop-loss to cap downside.
- Consider a take-profit to lock gains.
4) Risk basics
Leverage magnifies both profits and losses. A common beginner mistake is oversizing. Focus on consistency: keep risk per trade small (for example, 0.5%–1% of your account).
5) Your first trade checklist
- Choose a major pair (EUR/USD, GBP/USD) to start.
- Pick one setup and define entry, stop-loss, and take-profit.
- Size the position so the stop-loss equals your planned risk.
- Log the trade (reason, emotions, outcome).