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.
Forex is the exchange of one currency for another. When you trade Forex, you always deal in pairs (e.g., EUR/USD).
EUR/USD
GBP/USD
USD/JPY
USD/CHF
AUD/USD
USD/CAD
Spot Market (most common)
Forward Market
Futures Market
Central banks
Commercial banks
Hedge funds
Retail traders
Corporations
Smallest price movement in currency pairs.
Standard lot: 100,000 units
Mini lot: 10,000 units
Micro lot: 1,000 units
Borrowed capital to open larger trades.
Example: 1:100 leverage means $100 controls $10,000 trade.
Difference between buy (ask) and sell (bid) price.
Required amount to open a position.
Very small moves, many trades, fast decision-making.
All trades closed within the same day.
Holding trades for days or weeks.
Long-term approach based on fundamentals.
Forex prices are influenced by:
Interest rates
Inflation
GDP
Unemployment data
Elections
Geopolitical conflicts
Government policies
Traders’ emotions and predictions.
Shifts based on global financial flows.
Uses charts, indicators, and price action.
Key tools:
Support & Resistance
Trend lines
Moving Averages
RSI
MACD
Fibonacci levels
Focuses on macroeconomic data:
NFP (Non-Farm Payrolls)
CPI (Inflation numbers)
FOMC meetings
Interest rate statements
Measures how traders feel about the market.
Trade when the price breaks support/resistance.
Buy in uptrend, sell in downtrend using MA crossovers.
Enter after temporary market correction.
Trading based on major economic releases.
Identify sideways markets and buy/sell between zones.
The most important part of Forex trading.
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
Overconfidence
Lack of discipline
Over-trading
Emotional decisions
No risk management
Fear
Greed
Revenge trading
FOMO
Patience
Discipline
Consistency
Following your plan
Accepting losses as part of trading
Trading journal
Economic calendar
Forex calculators
Trading software: MT4, MT5, cTrader
Charting tools: TradingView
Risk management tools
Your plan should include:
Trading style
Preferred pairs
Entry and exit rules
Risk management rules
Daily routine
Backtesting strategy
Psychology checklist
A trading plan keeps you consistent and prevents emotional trading.
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.
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