Beginners Guide To Forex Trading

*Click to read the affiliate disclaimer*

(Last Updated On: )

What Is Forex Trading?

The Forex, or foreign exchange market, is where the currencies of the world are traded. It is the method of converting one currency into another. Traders make their money on the margins between the two currencies.

Even though you might only be interested in exchange rates when you’re going on holiday or buying something from another country, they are extremely important.

These currencies are trading exclusively by computer, meaning there is no centralized exchange. The Forex market can see over $5 trillion dollars traded per day. That’s more than the stock exchanges of the world.

The most commonly traded currencies are:

Australian Dollar (AUD)
Canadian Dollar (CAD)
Swiss Franc (CHF)
Euro (EUR)
British Pound (GBP)
Japanese Yen (JPY)
New Zealand Dollar (NZD)
US Dollar (USD)

Like many things, Forex has its own terminology you’re going to need to know.

Currency Pair – the two currencies that are involved in a particular trade. This is made up of the Base currency (the first) and the Quote currency (the second).

Day Trading – the activity of trading over a day, rather than relying on long term changes to the market.

Exchange Rate – the value of one type of currency in relation to the other.

Leverage – trading with more money than you have in your account margin.

Margin – the amount of deposit that is required to maintain or open a trade.

Pip – the smallest price movement a pair of currencies can make.

Spread – the difference between the bid price and the offer price.

Is It A Scam?

No, it’s not a scam, but Forex Trading has unfortunately become one of those things that unscrupulous marketers have tried to pass off as a get rich quick scheme, often in the hopes of selling you a course or subscribing to their trading platform.

Even the mainstream media can present a slightly biased view when they write stories about 17-year-olds who have made hundreds of thousands by Forex Trading in their lunch hours and weekends.

Can it make you money? Yes, potentially a lot of it. Is it easy? No. It requires a good deal of research and learning the ins and outs of the markets. Remember, if these things look too good to be true, they probably are.

To get started, you’ll need a good guide to Forex Trading, a Forex Broker and an initial stake. As with anything like this, don’t put in more than you can afford to lose.

How Do I Get Started?

The rise of trading platforms means it’s never been easier to get started in Forex. That doesn’t mean you should jump right in. It’s not a way of making money fast.

The more research and training you can do the better. It’s complicated to learn but once you do, your chances of making profits are good

Look for reliable guides from places like Investopedia and follow the markets for a while until you’re well versed in the terminology and the ins and outs of completing a trade.