Forex basics · Beginner

What Is Forex?

The currency market, how a pair actually works, and what a 50-pip move is worth on a real position size.

Last reviewed 15 September 2026 by the MarketPro research desk · Editorial policy

In short

Forex is the global market where one currency is exchanged for another. Currencies trade in pairs, so buying EUR/USD means buying euros and selling dollars at the same time, and your profit or loss comes from the change in the exchange rate. It runs 24 hours on weekdays through a network of banks rather than a central exchange, and it carries a substantial risk of loss.

What to remember

Every forex trade is relative. Buying EUR/USD is buying euros with dollars, so US news moves your position even when nothing changes in Europe.
A 50-pip move on EUR/USD is about 0.46%. Currency moves are small in percentage terms, which is why leverage exists here and why it does so much damage.
Most forex volume is not speculation. Banks, corporations and funds move currency for reasons that have nothing to do with your chart.
Going short is structurally no harder than going long, because both sides of a pair are currencies.

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Forex, short for foreign exchange, is the global market where one currency is bought with another. There is no exchange building and no opening bell. It is a network of banks, brokers, funds and corporations quoting prices to each other continuously from Sunday evening to Friday evening, and the daily turnover is measured in trillions of dollars. When you swap euros for dollars at an airport kiosk you are doing the same thing this market does, at a scale small enough to fit in a wallet.

What you are actually buying

Currencies trade in pairs, written base/quote. In EUR/USD = 1.0850 the euro is the base and the dollar is the quote, and the number says one euro costs 1.0850 dollars. Buying the pair means buying euros and selling dollars in the same instant. Selling it means the reverse.

That is why every forex position is a relative bet and never an absolute one. You are not deciding that the euro is a good currency. You are deciding it will buy more dollars later than it does now. A strong US employment report can push EUR/USD down while nothing whatsoever has changed in Europe, and a long position loses just the same.

Because both sides of the trade are currencies, there is nothing unusual about being short. Selling EUR/USD is simply being long dollars. There is no stock to borrow and no restriction to work around, which is one of the few genuine structural advantages this market has over equities.

One trade, with the numbers attached

Suppose you buy one mini lot of EUR/USD, which is 10,000 euros of exposure, at 1.0850, and close it at 1.0900. The pair moved 50 pips. On a mini lot each pip is worth roughly one dollar, so the position made about 50 dollars before costs. The identical move in the other direction would have cost about 50 dollars. Nothing about the direction changes the arithmetic. The pip calculator works it out for pairs where the conversion is less direct.

Now look at the percentage. Moving from 1.0850 to 1.0900 is a change of roughly 0.46%. Currency moves are tiny next to individual shares, and that single fact explains most of what follows in this category. It is why the market quotes in pips rather than percent, why leverage exists here at all, and why leverage causes so much damage: the only way to make 0.46% feel significant is to control a position many times larger than your account.

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Who is on the other side

Central banks set the interest rates that anchor a currency's value, and occasionally intervene in the market directly.
Commercial banks and liquidity providers handle the bulk of daily flow and are the source of the prices your broker passes on.
Corporations and asset managers convert currency to pay suppliers, repatriate earnings and hedge foreign holdings. They are not trying to predict the next 50 pips.
Retail traders are a small slice of total volume, dealing through brokers rather than directly with the interbank market.

That composition matters more than it first appears. Most of the volume passing through EUR/USD on any given day is not speculation at all, which means the price is largely set by participants with no interest in the chart pattern you are looking at. Understanding what those participants respond to is the subject of how forex prices move.

Why it appeals, and what that costs

The attraction is real. The majors are among the most liquid instruments in the world, so orders fill close to the quoted price. The market runs 24 hours on weekdays, so it fits around a job. Minimum deposits are small and position sizes go down to a micro lot, so you can start with a few hundred units of currency at risk rather than a few thousand.

Every one of those features cuts both ways. Round-the-clock access means there is never a moment when the market forces you to stop, which is a problem if stopping is the discipline you are short of. Small minimums mean people fund accounts with money they have not thought carefully about. Deep liquidity in the majors tells you nothing about the exotics, where spreads are wide and gaps are common. The trading sessions guide covers when the liquidity is actually there.

The part beginners skip

Two costs are present from the first click. The spread means a new position opens slightly in loss, and it must travel that distance before it is even flat. Overnight financing, called swap, is charged or credited on anything held past the daily rollover. Neither is large on a single trade in a major pair, and both are decisive over a few hundred trades.

The larger point is blunter. Trading currencies with leverage carries a substantial risk of loss, and most new traders lose money while they learn. That is not a warning label bolted on at the end; it is the base rate you are working against. Treat the first months as tuition, trade the smallest size your broker allows, and read risk management before you read anything about strategy.

Where to start

Learn to read a quote without hesitating, so you always know which currency you are buying and which you are selling. Learn what a pip is worth on the size you actually trade, because that number, and not the lot size, is what you are risking. Then pick two majors and watch them for a few weeks at the same time each day, so you build a feel for how far they normally travel in a session. Almost everything else in this category is an elaboration of those three habits.

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Work it through on your own position size. Nothing leaves your browser and there is no sign-up: Pip value calculator, Position size calculator, Margin calculator, Leverage calculator.

Written and reviewed by the MarketPro research desk

MarketPro is a trading-signal and trading-education app operated by Harajuku Holdings LTD (Cyprus). Our signal desk publishes and tracks every trade idea in-app, and every page here is checked against the app's live behaviour before publishing. Last reviewed 15 September 2026. How we produce signals and content · About MarketPro

FAQ

What Is Forex?: questions

Is forex trading suitable for beginners?

It is accessible to beginners in the sense that minimum deposits are small and position sizes go down to a micro lot. It is not easy. Leverage, 24-hour access and low barriers to entry combine badly with inexperience, and most new traders lose money while they learn. Starting with the smallest available size and a written risk limit is the sensible way in.

How much money do I need to start trading forex?

Many brokers accept deposits of 100 units of currency or less, but the deposit is the wrong number to focus on. What matters is whether your account is large enough that a sensible risk per trade, commonly 1% or less, still buys a position size your broker will accept. On a micro lot that usually means a few hundred units of account currency at minimum.

Why does the forex market trade 24 hours a day?

Because it is a network of banks spread across time zones rather than a single exchange. As Tokyo closes London opens, and as London winds down New York is in full swing, so there is always a major financial centre quoting prices. The market pauses only over the weekend, which is why prices can gap between Friday close and Sunday open.

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