📘 Forex Trading Handbook (Beginner to Intermediate Guide)

📖 Introduction to Forex Trading

Forex (Foreign Exchange) trading is the global marketplace where currencies are bought and sold. It is the largest financial market in the world, with over $7 trillion traded daily. Traders aim to profit from changes in currency prices — for example, buying EUR/USD when the euro strengthens against the dollar.

Forex operates 24 hours a day, 5 days a week, making it accessible to traders worldwide.

1️⃣ Chapter 1: Understanding the Forex Market

What is Forex?

Forex is the exchange of one currency for another. When you trade Forex, you always deal in pairs (e.g., EUR/USD).

Major Currency Pairs

• EUR/USD

• GBP/USD

• USD/JPY

• USD/CHF

• AUD/USD

• USD/CAD

Types of Forex Markets

• Spot Market (most common)

• Forward Market

• Futures Market

Market Participants

• Central banks

• Commercial banks

• Hedge funds

• Retail traders

• Corporations

2️⃣ Chapter 2: Important Forex Terms

Pip

Smallest price movement in currency pairs.

Lot Size

• Standard lot: 100,000 units

• Mini lot: 10,000 units

• Micro lot: 1,000 units

Leverage

Borrowed capital to open larger trades.
Example: 1:100 leverage means $100 controls $10,000 trade.

Spread

Difference between buy (ask) and sell (bid) price.

Margin

Required amount to open a position.

3️⃣ Chapter 3: Types of Forex Trading Styles

Scalping

Very small moves, many trades, fast decision-making.

Day Trading

All trades closed within the same day.

Swing Trading

Holding trades for days or weeks.

Position Trading

Long-term approach based on fundamentals.

4️⃣ Chapter 4: How Forex Prices Move

Forex prices are influenced by:

Economic Factors

• Interest rates

• Inflation

• GDP

• Unemployment data

Political Factors

• Elections

• Geopolitical conflicts

• Government policies

Market Sentiment

Traders’ emotions and predictions.

Supply & Demand

Shifts based on global financial flows.

5️⃣ Chapter 5: Forex Analysis Methods

Technical Analysis

Uses charts, indicators, and price action.

Key tools:

• Support & Resistance

• Trend lines

• Moving Averages

• RSI

• MACD

• Fibonacci levels

Fundamental Analysis

Focuses on macroeconomic data:

• NFP (Non-Farm Payrolls)

• CPI (Inflation numbers)

• FOMC meetings

• Interest rate statements

Sentiment Analysis

Measures how traders feel about the market.

6️⃣ Chapter 6: Forex Trading Strategies

1. Breakout Strategy

Trade when the price breaks support/resistance.

2. Trend Following Strategy

Buy in uptrend, sell in downtrend using MA crossovers.

3. Pullback (Retracement) Strategy

Enter after temporary market correction.

4. News Trading

Trading based on major economic releases.

5. Range Trading

Identify sideways markets and buy/sell between zones.

7️⃣ Chapter 7: Risk Management Rules

The most important part of Forex trading.

Golden Rules

• Risk only 1–2% of capital per trade

• Use stop loss in every trade

• Never over-leverage

• Set realistic targets

• Maintain proper risk-to-reward ratio (1:2 or 1:3)

• Avoid trading during emotional instability

Why Traders Lose Money?

• Overconfidence

• Lack of discipline

• Over-trading

• Emotional decisions

• No risk management

8️⃣ Chapter 8: Psychology of Forex Trading

Control Your Emotions

• Fear

• Greed

• Revenge trading

• FOMO

Build a Winning Mindset

• Patience

• Discipline

• Consistency

• Following your plan

• Accepting losses as part of trading

9️⃣ Chapter 9: Tools Every Forex Trader Needs

• Trading journal

• Economic calendar

• Forex calculators

• Trading software: MT4, MT5, cTrader

• Charting tools: TradingView

• Risk management tools

🔟 Chapter 10: Creating Your Forex Trading Plan

Your plan should include:

1. Trading style

2. Preferred pairs

3. Entry and exit rules

4. Risk management rules

5. Daily routine

6. Backtesting strategy

7. Psychology checklist

A trading plan keeps you consistent and prevents emotional trading.

🔚 Conclusion

Forex trading is a powerful financial opportunity, but success requires:

• Knowledge

• Proper strategy

• Discipline

• Strong psychology

• Risk management

This handbook gives you the foundation to trade confidently and develop into a skilled and consistent Forex trader.