Forex Trading For Beginners
Imagine a marketplace so big, it moves more than $7.5 trillion every single day. That’s the foreign exchange market, better known as forex. It’s the largest financial market in the world, where global currencies are traded around the clock. From institutional giants to first-time traders, people all over the world participate in this market with one goal: to profit from the changing values of currencies.
If you’re curious about global finance, looking to diversify your investments, or just want to explore a new opportunity, learning forex trading is a smart place to start. Let’s break it down.
What is forex trading?
Forex, short for Foreign Exchange, is a global marketplace where participants buy one currency while selling another at the same time. Currencies are traded in pairs like EUR/USD or GBP/JPY, which show how much one currency is worth compared to the other. Each pair consists of:
- • Base currency: The first currency listed (e.g. EUR).
- • Quote currency: The second currency listed (e.g. USD).
When you trade forex, you’re speculating on whether the base currency will strengthen or weaken against the quote currency. You can:
- • Buy (go long): You buy the base currency and simultaneously sell the quote currency.
- • Sell (go short): You sell the base currency and simultaneously buy the quote currency.
For example, if EUR/USD = 1.08, it means 1 euro is worth 1.08 U.S. dollars.
Why trade forex?
There are several reasons why forex trading is incredibly popular:
High liquidity
With such a high transaction volume, it’s typically easy to find buyers and sellers at almost any time.
Global reach
Because it involves currencies from around the world, traders can look for opportunities at nearly any time – there’s always something happening somewhere.
Volatility
Price swings offer opportunities for quick profits (and risks), which could be helpful for traders using short-term strategies like day trading or scalping.
24/5 Availability
The forex market runs continuously from Sunday evening to Friday night. The major trading sessions are:
| Market | Open (GMT) | Close (GMT) |
|---|---|---|
| Sydney | 9:00 PM | 6:00 AM |
| Tokyo | 12:00 AM | 9:00 AM |
| London | 7:00 AM | 3:00 PM |
| New York | 12:00 PM | 9:00 PM |
Trading volume often spikes during overlapping sessions (e.g., London and New York), which can lead to bigger price moves.
Political or economic news released on weekends can cause prices to jump when markets open again on Monday.
To see specific instrument trading hours please refer to easyMarkets trading hours.
What are the basics you need to know before trading forex?
1. Volatility
Currency values can change quickly, especially during major news events or data releases. This can create both opportunity and risk.
2. Currency correlations
Some currencies move in sync with others, or with commodities like oil or gold, for example. Understanding these relationships can help you make smarter trades.
3. Macroeconomic events
Central bank meetings, elections, or natural disasters can cause large swings in the forex market. Always stay informed.
How much do you need to trade forex?
Unlike some markets, forex doesn’t require a large upfront investment. With easyMarkets, you can open an account and start trading for just $25. easyTrade – exclusive to easyMarkets, allows you to set your maximum risk (which is the amount you could potentially lose if your trade goes against you), so you’ll always know your potential risk upfront. Want to give it a try?
What are CFDs and how do they work in forex?
CFDs (Contracts for Difference) let you trade on price movement without owning the actual currency. These unique financial instruments are favored by investment professionals and institutions due to their flexibility. With CFDs, you can:
- • Potentially profit from both rising and falling prices.
- • Access leverage, which lets you open larger positions with smaller capital (though this increases risk).
- • Enjoy risk management tools like Guaranteed Stop Loss with No Slippage**, take profit orders, and negative balance protection to control potential losses or lock in gains.
Guaranteed Stop Loss with No Slippage:
Protect your trades and control risk
A stop loss order automatically closes your position if the market hits a specified price, preventing further losses. On easyMarkets proprietary web and app platforms, you can activate a Guaranteed Stop Loss with No Slippage, which ensures your trade closes exactly at the stop loss level you’ve chosen, even in fast-moving markets.
By activating this guarantee, you accept a slightly wider spread, which in return provides total risk control and safeguards you against runaway losses.
No slippage means the rate you click is the exact rate you get when opening or closing a position. In traditional (non-CFD) currency exchanges, trades need to be matched with an opposing order, causing potential delays and price changes, especially during market volatility. easyMarkets zero-slippage execution eliminates this risk of an unexpected fill, helping you avoid unforeseen costs or missed profit targets.
This combination of risk management tools and conditions gives you greater confidence in your orders even under rapidly changing market conditions.
Understanding leverage
Leverage lets you control a larger position with a smaller amount of capital. For example, with 1:30 leverage, a $100 margin lets you control $3,000 worth of currency.
This can amplify your profits, but it also increases potential losses. Since you’re trading a larger amount, even small market moves can have a big impact. If the trade moves against you, your losses can quickly add up, and your position might be closed automatically if your account runs out of margin. Know your limits and always use leverage carefully.
Forex currency pairs explained
In forex trading, currencies are typically displayed in pairs, which are split into three main categories:
Majors
Always include the USD and one of the major currencies (EUR, GBP, CHF, AUD, NZD, JPY, CAD). Examples: EUR/USD, USD/JPY.
Major currencies are favored by new traders because of their high liquidity and large amount of available data. News outlets frequently cover events which affect these currencies. Also, many commodities and precious metals are bought and sold in USD.
Minors (Crosses)
Do not include the USD. Examples: EUR/GBP, AUD/JPY and EUR/CHF.
Minor pairs also offer large amounts of data, since most of the currencies involved are some of the market’s most popular.
Exotics
One major currency + one from an emerging market. (e.g., USD/TRY, EUR/ZAR).
These are riskier but can offer higher rewards.
What are Bid and Ask prices?
Ask and bid prices (also called offer and bid), are how prices are quoted in forex and certain other types of CFD trading.
- • Bid price is: The highest price a buyer is willing to pay
- • Ask price is: The lowest price a seller is willing to sell
When those two rates match, a trade is made.
The difference between these two rates or values is known as the spread.
What is a Spread?
A spread is simply the difference between the bid price (what buyers are willing to pay) and the ask price (what sellers are asking for) in a forex pair like EUR/USD.
Why does it matter?
When you enter a trade, the broker effectively takes the opposite side. For instance:
- • Buying (long) EUR/USD means you’re buying euros and selling U.S. dollars.
- • Selling (short) EUR/USD means you’re selling euros and buying U.S. dollars.
This price gap between buying and selling is measured in pips – usually 0.0001 for most pairs. For example, if EUR/USD goes from 1.1800 to 1.1802, that’s 2 pips.
That means:
- • If you buy, you start with a 2-pip loss and need the price to rise more than 2 pips to profit.
- • If you sell, and the price rises by 2 pips, you take a 2-pip loss.
Fixed vs. Variable spreads
- • Variable spreads can widen during high volatility, like major news events or political upheaval, increasing trading costs.
- • Fixed spreads stay the same, which makes your trading costs more predictable.
Overall, the spread represents the cost of entering a trade. Understanding whether it’s fixed or variable helps you plan your strategy and manage costs effectively.
easyMarkets offers CFD trading with tight fixed spreads through MT4, TradingView, and our web and app platforms – ensuring transparent and easily calculated pricing. Meanwhile, MT5 offers variable spreads for those who prefer greater flexibility.
Pips explained
A pip (point in percentage) is the smallest price movement in a currency quote. Generally, most currencies use four decimal places to calculate pips:
- • EUR/USD: 1.1800 → 1.1801 is a 1-pip move.
- • USD/JPY quotes often have two decimal places: 111.25 → 111.26 is a 1-pip move.
How profits and losses are calculated
To understand your gains and losses in forex trading, you only need to focus on three main concepts:
Pip Movement
How far the price moves between when you enter and exit a trade.
Lot Size
The number of currency units you’re trading (standard, mini, or micro lots).
Pip Value
The amount of money one pip movement is worth, based on your lot size and currency pair.
To calculate profit or loss:
Pip Movement × Lot Size × Pip Value = Your P/L
Many trading platforms can do this math for you automatically, but understanding it helps you plan smarter trades.
Once you're confident in the basics, you can start learning technical indicators to help you decide when to enter or exit trades – like spotting trends or identifying support and resistance levels.
Remember: while forex offers exciting opportunities, it's not without risk. Prices can move fast, so always have a risk management strategy in place before trading real money.
Tip: Start with a demo account to practice trading, learn how the platform works, and test your strategy without risking anything.
Risk management:
The cornerstone of successful trading
Trading forex without risk management is like driving without brakes. Here are the essential tools and strategies to keep your losses under control while you aim for consistent gains:
1. Stop Loss Orders
As mentioned previously, stop loss is a predefined price level that automatically closes your trade if the market moves against you. This also prevents ‘runaway losses’ when the market moves sharply and unexpectedly. Be sure to set your stop loss at a level that makes sense based on your analysis. Too tight, and you may get stopped out prematurely; too wide, and you might risk more than necessary.
2. Take Profit Orders
A take profit works like the opposite of a stop loss. It automatically closes your position once the market reaches your chosen profit target. This ensures you lock in gains without constantly monitoring the market. When setting your take profit levels, consider support/resistance zones or risk-to-reward ratios.
3. Position Sizing
Position sizing determines how large or small each of your trades should be. One common guideline is to risk no more than 1-2% of your account balance on a single trade. For example, if you have $10,000 in your trading account and choose a 1% risk level, your maximum potential loss on any trade should be $100. This helps you withstand multiple losses without wiping out your capital.
4. Demo Trading
It’s wise to practice on a demo account before risking real money. You can familiarize yourself with the platform’s tools, learn how to place orders, and refine your trading strategy in real market conditions without putting your capital at risk. Once you feel confident, you can transition to a live account and gradually increase your trade sizes.
What to look for when choosing a Forex Broker
A reliable broker is key to a good trading experience. Here's what to look for:
Check to see what kind of licenses and what regulatory body your prospective broker reports to. This ensures that no matter what happens, you and your funds are protected. easyMarkets is regulated by CySEC, ASIC, FSA, FSC, and FSCA, so we can accept clients from across the globe.
Trading conditions and execution can affect your costs, raise your bottom line and cut into your profits. Here are a few items to look for to avoid unnecessary costs:
- • Transparent Pricing: You should understand all fees/spreads clearly.
- • Negative Balance Protection: Ensures you never lose more than you deposit.
- • Tight Fixed Spreads: Avoid unexpected changes in trading costs during high volatility.
- • Guaranteed Stop Loss with No Slippage**: Ensures your trade closes exactly at the stop loss level you’ve chosen.
Price transparency is important when trading forex. Choosing a broker with fixed spreads ensures that your cost won’t increase during volatility, when risk and opportunity are at their highest. easyMarkets offers Guaranteed Stop Loss with No Slippage**, tight fixed spreads and variable spreads, and never charges hidden fees.
Having access to multiple markets can help spread your risk and let you capitalize on different market conditions. For example, when currency markets become volatile due to policy announcements or geopolitical events, many traders turn to Gold, which often rises in value as a safe haven.
With easyMarkets, you can trade more than 275 instruments across a range of markets: oil and energy commodities, forex, metals, indices, cryptocurrencies (including weekend trading), and shares.
easyMarkets offers shares from some of the world’s biggest markets: U.S., Europe, Hong Kong, Australia and Japan. This allows you to trade shares around the clock, five days a week.
easyMarkets offers multiple trading and risk management tools through our proprietary platforms, including Guaranteed Stop Loss with No Slippage, and negative balance protection.
We also offer our exclusive trading tool, easyTrade, which is a unique options-based trading ticket that lets you set a maximum risk amount without capping your trade’s potential.
You can open an easyTrade in just three steps. Choose your trade size (which is also your maximum risk amount), the duration of your easyTrade, and decide whether the rate will go up or down.
Expand your trading knowledge with easyMarkets Academy, which features easy to understand video lessons and knowledge tests that help new and experienced traders to test their knowledge.
easyMarkets website also features an exhaustive Forex Trading education library with videos, articles and free downloadable e-Books.
Trade with easyMarkets through a wide range of platforms, including:
- • easyMarkets Web Platform: User-friendly, with integrated market news, economic calendar, analytics, risk management tools and Inside Viewer.
- • easyMarkets Mobile App: For trading on the go, with real-time quotes and execution.
- • TradingView: Combine industry-leading conditions with a social network for traders, offering advanced charting and analytics.
- • MetaTrader 4: Widely used by experienced traders for its customization and available expert advisors (EAs).
- • MetaTrader 5: The most advanced MetaTrader platform, with variable spreads and negative balance protection.
Since launching in 2001, client satisfaction has always been at the heart of what we do. That’s why our customer service consistently earns high praise. 89% of our clients on Trustpilot have rated us as “Excellent” with five stars.
Our multilingual support team is ready to help you in English, Arabic, Spanish, Portuguese, German, Polish, Italian, Chinese and Japanese – so no matter where you’re from, we got you covered.
Another important consideration when choosing a broker is how fast their funding is and what types of payment methods are available.
The easyMarkets deposit and withdrawal process is simple, fast and supports multiple payment and withdrawal methods, depending on the region. Payment methods include local online bank transfers, major credit/debit cards Visa, Mastercard, Maestro (EU only), as well as eWallets such as WebMoney, Neteller and Skrill. There are several payment methods that are specific to a certain country, such as PIX for Brazil, for example.
You can check which payment methods are available for your region here.
Ready to Begin?
Explore the forex market confidently and safely with easyMarkets. Start small, learn the ropes, and build up as you go. Whether you're trading on the go or from your desktop, you’ve got the tools, support, and education to succeed.
**Guaranteed Stop Loss with no Slippage is only available on easyMarkets web & app trading platform. Activate it with wider spread for total risk control.
Imagine a marketplace so big, it moves more than $7.5 trillion every single day. That’s the foreign exchange market, better known as forex. It’s the largest financial market in the world, where global currencies are traded around the clock. From institutional giants to first-time traders, people all over the world participate in this market with one goal: to profit from the changing values of currencies.
If you’re curious about global finance, looking to diversify your investments, or just want to explore a new opportunity, learning forex trading is a smart place to start. Let’s break it down.
