Forex Courses for Beginner Currency Traders

This guide is designed to provide beginner traders with foundational knowledge. Key trading concepts covered include:

Introduction to Trading

Forex is the biggest financial market worldwide. Currencies trade over the counter in this OTC setup. It sees $7.2 trillion in daily volume. That makes it the most liquid market. Its size means someone always wants to trade the currency you need, any time of day.

Because the market is so liquid and large, the costs to trade in this market are very low, and this is why so many traders are interested in trading currencies.

The market remains operational continuously, 24 hours a day, for five and a half days each week.

About Market

Forex is an over-the-counter market. No central spot exists. Trades happen via a network of big banks called interbank.

Popularity of Online Retail Trading

Retail traders account for 95% of all transactions executed within the currency market. The retail sector has seen escalating popularity among individual traders and investors, largely attributed to technological advancements. A novice currency trader only requires a computer with an operational internet link to configure and begin trading.

When a trader wants to start trading currencies online, they can create an account with an online broker. Traders can pick from many different online brokers. When a trader has an account with a broker, they can trade any currency from that account. The trader will simply use a type of software, and they can then make trades directly to the online market through their broker.

The broker facilitates market access for retail traders and investors by offering technology that connects them to trading platforms.

Currency Pair

FX currencies trade in pairs, often referred to as currency pairs. For instance, the EURO and the US Dollar form the EURUSD pair, which traders use to exchange Euros for US Dollars or vice versa. A trader looking to exchange Euros for US Dollars will engage with the EURUSD currency pair.

Currency Exchange Rate

The currency exchange rate is the price at which one currency is quoted against another currency. This exchange rate is used in determining how much one currency will be exchanged for compared to another currency. For Example if EURUSD exchange rate is 1.2500 it means that a trader will exchange 1 EURO for 1.2500 US Dollars.

Pip

Pip means Price Interest Point and this is the unit used to calculate forex currency pair moves. A pip is equivalent to a one point movement in the exchange rate of a currency. A pip is the minimum price increase(or decrease) in the exchange rate of a currency. For example in EURUSD exchange rate is 1.2500 & the currency moves 1 pip then this will mean the current exchange rate will now be 1.2501 - the pip is the last point in this example and can be denoted as 0.0001. A pip is one hundredth of 1 cent, hence 100 pips movement is equal to 1 cent.

Spreads

In trading there are two prices for a currency pair, these 2 prices are:

Bid - or sell price

The bid is the price at which a trader can sell the currency

Ask - or buy price

The ask is the price at which a trader can buy the currency

The distinction between these two prices - the Bid and the Ask - is termed the spread. For instance, if EUR/USD is quoted at Bid/Ask prices of 1.2600/1.2602, the spread is the quantitative difference between these figures, which amounts to 2 pips. Thus, the spread in this particular illustration is measured at 2 pips.

What is Leverage?

Because a lot of retail traders can't afford to trade 100,000 units of currency or even 10,000 units of currency, there is the option of leverage provided in Forex which means that forex traders can borrow money and use this borrowed money to open trades with. For example leverage of 100:1 means that a trader with capital of $1,000 can borrow up to 100 times using this 100:1 leverage option & therefore after borrowing using this leverage option the currency trader will have a total of $1,000 multiplied by 100, which means the trader will have a total of $100,000 and can therefore trade one standard lot of $100,000 dollars units of currency. This leverage is what makes accessible to many retail traders because retail traders can begin with little amount of capital of their own and use leverage to borrow the rest of the money required for trading currencies. The money that the trader deposits is referred to as their margin and one can continue borrowing money using this leverage option as long as they have the required margin in their trading account. This is why the traders must have the required account balance in their trading account to open the trades they want, for example a trader using leverage 100:1 must have more than $1,000 dollars in their trading account to be able to open & trade using standard contracts/lots.

What is Trading Margin?

Margin is the specific amount of money a trader needs to set aside to keep a leveraged trade open. Margin can also be described as the deposit a trader must keep in their account to maintain their open positions. This margin is a percentage of the account's total value that must be set aside as margin for the open trades held by a forex trader.

Charts

The fundamental instrument employed to illustrate prevailing conditions in the trading arena is the chart. A chart visually represents the fluctuations in a currency's price across a defined timeframe. Traders utilize these charts for market analysis to project the probable future movement of the market.

A chart maps currency supply and demand. It mirrors trader mindset. It highlights buyer-seller balance for that pair.

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