The forex market
Forex (foreign exchange, FX) is the global, decentralised market for trading currencies. About $7.5 trillion changes hands every day — more than every stock market combined. It's open 24 hours a day, five days a week, with no central exchange: trades happen over-the-counter (OTC) between banks, brokers, hedge funds, corporations and retail traders.
How a forex trade works
You always buy one currency and sell another. The pair EUR/USD at 1.08500 means 1 euro costs 1.08500 dollars. Buy EUR/USD if you think the euro will strengthen against the dollar; sell if you think it will weaken. Profit comes from the price difference between your entry and exit, multiplied by your position size.
Currency pairs
- Majors — the seven most-traded pairs (EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, NZD/USD, USD/CAD). Tightest spreads, deepest liquidity.
- Minors / crosses — pairs without USD (EUR/GBP, EUR/JPY, GBP/JPY).
- Exotics — emerging-market pairs (USD/TRY, USD/ZAR). Wider spreads, more volatile.
- Commodity pairs — XAU/USD (gold), XAG/USD (silver). Treated alongside FX in most platforms.
Pips, lots, leverage
A pip is the standard price increment. For most pairs, 1 pip = 0.0001. For JPY pairs, 1 pip = 0.01. For gold, 1 pip = 0.10.
A lot is the position size. Standard = 100,000 units of the base currency; Mini = 10,000 (0.1 lot); Micro = 1,000 (0.01 lot). 1 pip on 1 standard EUR/USD lot = $10. Mini = $1. Micro = $0.10.
Leverage lets you control a bigger position than your account balance. 1:100 means $1,000 controls $100,000. It amplifies wins and losses linearly.
The four sessions
Activity rotates around the planet:
- Sydney — 22:00–07:00 GMT. Light volume, AUD/NZD-driven.
- Tokyo — 00:00–09:00 GMT. JPY pairs, range-bound.
- London — 08:00–17:00 GMT. Highest volume; majors break ranges here.
- New York — 13:00–22:00 GMT. US data drops at 13:30; the London-NY overlap is the most volatile window.
Three kinds of analysis
- Technical — price action, support/resistance, moving averages, RSI, Fibonacci, candlestick patterns.
- Fundamental — interest rates, GDP, employment (NFP), inflation (CPI/PCE), central bank statements.
- Sentiment — COT reports, broker positioning, fear/greed indices.
How to start (5 steps)
- Open a regulated broker account (XM via the 734PT partner code is what we use).
- Demo for 2–4 weeks. Trade 50+ setups before risking real money.
- Read a foundation book. Trading in the Zone (Mark Douglas) and Technical Analysis of the Financial Markets (John Murphy) are the two non-negotiables.
- Write a one-page plan. Setup, entry, stop, target, max risk per trade.
- Go live with a small account. Risk 0.5–1% per trade until you have 100+ logged trades.
Tools
Use the calculators before each trade — they take 10 seconds and prevent six-figure mistakes: