How to Start Trading Forex (Complete Beginner Guide)
Learn the forex basics—pairs, pips, lot sizes, leverage, risk rules, and a simple starter plan—to place your first responsible FX trade.
Key Takeaways
- •Start with a demo account and practice with 0.5-1% risk per trade
- •Focus on 1-3 major pairs until you're consistently profitable
- •Use proper position sizing and always have a stop-loss plan
What is Forex?
Forex is the global market for trading one currency against another (e.g., EUR/USD). It runs 24/5 with the highest liquidity of any market.
Key Terms You Must Know
Base/Quote
In EUR/USD 1.1050, EUR = base, USD = quote.
Pip
Standard 0.0001 price move on most pairs (0.01 on JPY pairs).
Spread
Broker markup between bid and ask.
Leverage
Borrowed buying power (e.g., 1:30, 1:100). Magnifies gains and losses.
Lot Size
Standard (100k units), mini (10k), micro (1k).
Step-by-Step: Your First Responsible Trade
Pick a Regulated Broker
(see broker selection guide)
Open a Demo
Practice order types (market, limit, stop)
Define Risk per Trade
(e.g., 0.5–1% of account)
Choose a Pair & Timeframe
(e.g., EUR/USD on 4H)
Plan the Trade
Entry, stop-loss, take-profit, and rationale
Position Size Properly
(see sizing guide)
Journal the Trade
(screenshots, notes, lessons)
Simple Starter Setup (Example)
- Trend filter: 50-EMA slope
- Entry: Pullback to 20-EMA + bullish/bearish engulfing candle
- Stop: Below/above swing
- Target: 1.5–2.0R or next structure
Risk & Psychology
Start small. Avoid revenge trades. Accept losing streaks as normal. Treat trading like a business with KPIs (win rate, average R, expectancy).
Pro Tips: Use a checklist before every trade. Automate screenshots with your platform's tools.
Common Mistakes: Over-leveraging, no stop-loss, strategy hopping every week.
Frequently Asked Questions
How much to start?
Start with what you can afford to lose; many begin with $500–$2,000 and risk 0.5–1% per trade.
Is demo trading useful?
Yes—prove consistent rules and risk control before going live.
How many pairs should I trade?
1–3 liquid majors until you're consistent.