How to Start Trading Forex

How to Start Trading Forex

Many people may already know that the Forex market (Foreign Exchange Market) is the largest financial marketplace in the world. It operates 24 hours a day, five days a week, where investors and traders can buy and sell currency pairs such as EUR/USD, GBP/USD, or USD/JPY, aiming to profit from fluctuations in exchange rates.

One of its key features is the ability to make profits in both rising and falling markets. However, it also carries significant risks, making it suitable only for those who study and understand the market mechanisms carefully.

| Key Takeaways |

• Forex is not about physically exchanging or holding real currencies.
• CFD (Contract for Difference) trading provides flexibility in accessing various asset classes.
• Profit in Forex trading comes from predicting whether a currency pair will rise or fall, and by how much.
• Your potential gains in Forex depend on the lot size and how effectively you manage risk.

Forex Is Not Currency Exchange

One of the most important things beginners should understand is that Forex trading is not the same as physically buying or exchanging currencies at a bank or financial institution. Instead, it is speculation through CFDs (Contracts for Difference), which allow traders to buy or sell currency pairs without actually holding the underlying cash.

The key point is that profits or losses depend on price movements—not on exchanging banknotes or balances. This means Forex trading focuses on predicting market direction and managing risk, rather than owning real assets.

What Is a CFD?

A CFD is a financial instrument created to add flexibility to investing. It allows both beginners and institutional investors to speculate on price changes of different assets—whether currencies, stocks, indices, or commodities—without owning the actual asset. With CFDs, traders can profit from both rising prices (Buy/Long) and falling prices (Sell/Short). Another advantage is that it requires relatively low initial capital thanks to leverage, which increases market accessibility.

Tip: Aside from Forex, another highly popular asset traded through CFDs is XAU/USD, which represents the price of gold quoted against the U.S. dollar.

How to Make a Profit from Forex

Earning profits in the Forex market follows a few basic principles:

• Choose the currency pair you want to trade.
• Predict the direction in which the price will move (up or down).
• Open a Buy order if you expect the price to rise, or a Sell order if you expect the price to fall.
• Once the price moves in your favor, you can close the order and take profit from the price difference.

While the core idea of profiting from Forex may sound simple—just predicting whether the price will rise or fall—the reality is more complex. There are many features, tools, and details that directly affect both profits and losses. These are essential for traders to study carefully and should never be overlooked.

What You Should Learn Next

• Pip : The unit that measures price movement.
• Lot Size : The trading volume for each order.
• Stop Loss : An automatic order that limits losses when the market moves against your prediction.
• Take Profit : An automatic order that locks in profits once your target price is reached.
• Leverage : Borrowed capital from a broker that allows you to open larger positions, amplifying both potential gains and risks.

A reliable broker can make your trading journey smoother.

With IUX, you gain access to modern trading technology, comprehensive analysis tools, real-time price charts, and lightning-fast execution. Plus, you’ll have a dedicated support team available 24/7.

Start your Forex trading journey with IUX today—test your strategies, sharpen your skills, and unlock opportunities in the global financial markets.

Simple Example of Forex Trading

Let’s say you expect the EUR/USD currency pair to rise, and you decide to open a Buy order.

• Open Order

  • You predict that “the euro will strengthen against the U.S. dollar.”

  • So, you open a Buy position on EUR/USD at 1.1000.

• Price Movement

  • Later, the price moves up to 1.1050.

  • The difference is 0.0050, or 50 pips.

• Close Order

  • You close your position at 1.1050.

  • Profit = Price Difference × Order Size (Lot)

• Profit Calculation

  • If trading 1 Lot → 1 pip ≈ $10 → Profit = 50 pips = $500

  • If trading 0.1 Lot → 1 pip ≈ $1 → Profit = 50 pips = $50

  • If trading 0.01 Lot → 1 pip ≈ $0.10 → Profit = 50 pips = $5

As you can see, your profit depends on the lot size and the accuracy of your prediction. If the price rises as expected and you opened a Buy order, you earn a profit. But if the market moves against your prediction, you risk losing your capital.

Always remember that trading carries risk. Careful planning and strong risk management are essential. Beginners should start with a demo account to practice analysis and understand how the market works before investing real money. Once moving to a live account, it’s best to commit only a small portion of your capital, always set a Stop Loss, and avoid letting emotions drive your decisions.