Forex Trading Guides 2024

Forex trading offers you the opportunity to invest in currency exchange rates, such as the exchange rate between euro and dollar. Basically, you can make profits based on your predictions on the exchange rate between the two currencies. On this page you will find a complete forex beginners guide to trade online via your computer or smartphone.

Introduction to Forex

Every day there are millions of users all over the world who trade Forex online, even with small capital, for profession or hobby.

What is Forex? Forex is an acronym for Foreign Exchange market. It is the largest market in existence, where currencies are traded and profits are made on their difference. With the arrival of the internet, it is now possible, even for small investors, to buy and sell currencies simply with a click, through online brokerage accounts offered by brokers. 

But how does Forex work? In this Forex guide for beginners, we will explain everything from the ground up so that you can have good pillars on which to build your learning.

Now that we have seen that Forex is the currency market, we are going to highlight the following FX features:

  • It is enormous in size, so it cannot be manipulated
  • It has low operating costs
  • It offers the possibility to operate even with small capitals through CFD brokers
  • It is located all over the world
  • It is active 24 hours a day (weekends excluded)
  • It is influenced by numerous (macroeconomic) factors

Forex is the largest market in the world in terms of transactions. In fact, every day exchanges are carried out with a total value of over $5.1 trillion. Its size makes it fair, because it allows it not to be interested in speculatory movements. This is especially true for primary exchange rates, the most important ones, such as the Euro/Dollar (EUR/USD).

But where is Forex located? In reality, Forex has no physical location and is decentralized. The Forex market is an Over The Counter (OTC) market, since it is outside the official stock exchange circuits and with much less constraints.

Guide on Forex Trading 

Do you want to gain an expert level of knowledge and skills teaching, training, and assisting another person to achieve the goals they have set for themselves. As we know Forex trading can be very complicated and therefore need some guidance or assistance in order for us to fully understand the different factors that come into play whilst trading forex.

In this guide, we are going to share our knowledge on how you as a trader can successfully trade on the foreign currency market without any losses or unnecessary risks. In addition, this guide will help you as a newbie trader who wants to learn more about forex trading through online resources. In this guide, we will focus on basic information on how you start learning Forex Trading, identify reliable learning platforms which provide quality education for free or for a small fee.

This guide on forex trading will guide you through the process of choosing the right forex broker, how to open a real live trading account, and finally which are the best tools for training.

If you don't know where to start when it comes to the forex trading guides, we can assure you that this guide will guide you in a step-by-step guide from finding the right learning stage to achieving success on Forex Trading. Those who are interested in stocks and crypto trading could read our crypto trading guides, ETF trading for beginners and stocks beginners guide.

What it takes to trade Forex online

In this section of the Forex trading guide, we will introduce you to platforms to evaluate yourself.

To trade on currencies you need a minimum of equipment and a little practice in order to become familiar with the tools and gain experience to operate with real funds. We repeat what it takes:

  • A computer, tablet, or good mobile device;
  • A stable internet connection (much better if you own it);
  • A trading platform, such as Plus500 and eToro (which we use to give the examples in this forex beginners guide).

So, if you already have a connection, you only need the trading platform to get started, which you can access in a few moments. Also consider that from the trading platform, from the broker's site and on specialized sites like ours, you can access all the tools with which to integrate your business.

What knowledge is required?

When trading Forex, practicing improves your experience level, and as you get more experience you get better results too.

You can be an expert or a less expert but in any case everyone, sooner or later, starts "from scratch". The optimal steps to start trading currencies include studying:

  1. Principles and logic that govern the market
  2. Factors that affect a specific currency pair
  3. How trading works

After reading this forex guide for beginners, you can start practicing with a demo account. In fact, practice is the best way to study, learn quickly and gain experience.

As regards point 2 (specific knowledge of the mechanisms that influence a specific currency pair) we have set it up in this way since it is universally considered correct and optimal to “specialize” in a few financial instruments. You could choose, for example, the Euro Dollar, since it is the most traded currency pair on Forex and it is also the most convenient from a cost point of view (low spread).

Once you have decided on which currency pairs to trade, just focus on those. "Specialize" in those. In doing so, you will not waste your energy and your precious time. Any currency pair can offer chances of making good profitable trades.

Start with a couple, then gradually add more, but stop at 3-4 pairs at most, at least for the first year.

How forex works

In Forex, one currency is bought and another one is sold at the same time. This is because currencies are quoted and traded in pairs. For example, the EUR/USD is precisely a currency pair that includes the euro and the US dollar. When trading on EUR/USD it means that you buy one and sell the other.

How? Simple:

  • Buying the euro and selling the dollar if the euro is expected to strengthen in the EUR/USD pair
  • By selling the euro and buying the dollar if the dollar is expected to strengthen in the EUR/USD pair

When trading Forex, you can open Long (upward) or Short (downward) positions. In the case of the EUR/USD, you can open a Long position if you want to “bet” on the euro, or a Short position if you expect a strengthening of the dollar.

The same mechanism applies to all currency pairs, also known as "Currency Crosses". Each pair is in fact made up of two currencies, the base currency and the quoted (or "counter") currency.

And how is the price decided? The buying and selling price of the base currency against the quoted currency is formed on the market. When you look at a chart of a currency pair, you see the 'Bid' price, which is the purchase price of the base currency against the quoted one. The difference between Bid and Ask is called Spread and it also measures the broker's cost for its brokerage service.

What influences the exchange rates?

What moves the Forex market? We know that a market price is based on the dynamics of supply and demand, but the point is to understand when to buy and when to sell. What affects the market? What drives you to buy or sell? To answer these questions, a little deepening of the concept of macroeconomics is necessary. This is all part of the so-called fundamental analysis of Forex.

In the Forex market, currencies are traded in pairs. Currency pairs express a relationship between the two-component currencies.

For example, when there is an exchange rate of 1.10 between the Euro and the Dollar, it means that to buy 1 euro it takes $1.10.

But what influences this exchange rate? Why should an investor or trader buy euros and sell dollars? Why would another buy dollars and sell euros?

To understand the answer, just step into the shoes of Ethan the informed investor, for a moment.

As you can see, Mr. Ethan trades on Forex in day trading mode (opening and closing positions within the day) and is a fan of the EUR/USD. Every day, it decides from time to time on which of the two currencies to “bet”, or decides whether to open upward or downward positions.

To evaluate, he will take a look at economic news and in particular those that could affect the Eurozone (which uses euros) and the United States (which uses dollars) economies.

He will pay close attention to the so-called economic calendar, which is a calendar in which the dates and times in which some data will be published are reported, among which the most important are those relating to some macroeconomic indicators. They are called "indicators" because as a whole they indicate the overall performance of a large economy, such as the national one or a community of states (such as the Eurozone). The main macroeconomic indicators are:

  • Change in interest rates
  • GDP and Deficit/GDP ratio
  • Inflation
  • Trade balance (ratio between import/export)
  • Data on employment
  • Industrial production

As you can see, this is data that is discussed every day on the main information channels, not only economic but also general, since it is the most important data of an economy.

Starting with a risk-free demo

The great competition between brokers has made it possible to offer increasingly convenient conditions for customers. One of the most advantageous conditions offered today by some online brokers is the possibility of practicing through the demo account, that is an account in which you have a virtual capital, which you can use to practice on the trading platform under the same conditions as the real account. but without risk.

In a Forex demo account, all price data is real. The only thing that is not real is the usable budget, as it is fake money (so you don't risk anything). The only other difference is that obviously, by operating with virtual funds, the transactions carried out do not affect the market.

Well, speaking of experience, there is no better way to gain experience than by practicing in the field. In this sense, the risk-free demo account will prove to be an excellent practice tool for acquiring experience and therefore also knowledge (of trading instruments, market dynamics, indicators for technical analysis, etc).

How to activate a demo account

The first thing to do to practice Forex with virtual funds is to activate a demo account.

Here are the steps to follow to open an account and activate the demo:

  • Select the broker you want to trade with ( go to the trading platforms list )
  • Click on "register" or "subscribe"
  • Complete the registration form, setting a username and password

Once you have completed the third step, you will already be inside the platform. In the meantime, you will receive a welcome message by email.

For our example, we used the Plus500 platform demo, which you can access by only providing an email address and setting a password. If you want to activate the real account later, you will have to enter your personal data instead.

To access the Plus500 demo account, visit this official page, choose “demo mode” and finally on 'new user'. In less than 1 minute you will be able to access the trading platform on the browser, reachable from any device (both fixed and mobile) and from any operating system.

A look at the trading platform

Once the platform is started, it is good to take a look at its appearance: how it is made, how the sections are divided, and how to easily view what it takes to do Forex trading.

While each trading platform has specific characteristics, in general, they are structured in the same way. Within the Forex platform you will be able to identify several sections:

  • Real time graph
  • Categories of negotiable instruments
  • Specific assets with price and buttons to open the position
  • Income statement
  • Additional functions (technical analysis, economic calendar, etc.).

The live chart allows you to view price changes. When the market is closed, on the weekend, it stops at the close on Friday night. This is true for most of the instruments but not for example for cryptocurrencies, which instead are active every day of the week. However, we point out that cryptocurrencies such as bitcoin are not part of the Forex market, as it is an independent market in its own right.

For Forex trading, tradable instruments are present on the top left column, under the "foreign exchange" category. These are usually divided into subcategories: main, secondary, virtual. The most important currency pairs can be found under "main", where you will also find the EUR/USD.

The account section offers an overview of the account situation. Items that are never lacking are the available capital, the number of margins (we will see later what they are), the profits or losses of the positions still open.

Each platform offers different types of functions, which can be called up via buttons or menus. Among the most important are those concerning the details of the tools and the technical analysis functions. Plus500 for example offers a simple but at the same time professional platform.

Technical analysis

Technical analysis represents the study of the price trend of the currency market over time, with the aim of predicting future trends through the adoption of graphical and statistical methods.

In simple terms, with the technical analysis, we interpret the price charts in order to predict what will happen in the future and in some cases to identify an ongoing phenomenon.

How technical analysis is applied

Technical analysis can be applied in several ways including:

  • Through graphic indicators
  • Through graphic patterns

The graphical indicators are nothing but mathematical and statistical functions in graphical form, that apply overlapping them or supporting them to price charts. For example, there are indicators that identify and follow trends (trend following), while others that look for reversal points.

There are meters that measure the volatility of the market while others estimate normalized prices in situations of possible overbought or oversold.

The patterns, which literally translate into "paths", are precisely the paths that the price theoretically travels on the chart when certain conditions occur. Very famous are the theorized patterns together with the use of Japanese candlesticks, which we talked about in a specific lesson in our CFD course.

Where to get Forex Guide for Beginners?

Beginner traders are traders who are studying to understand how forex works and how to earn and therefore often need beginner forex guides for example or in any case free material to get started.

Many brokers such as eToro provide training centers where you can download Forex trading guides and watch videos that help you understand how to get started with forex trading. 

It is important to underline that forex is not a game and therefore must be faced with the right spirit and with a serious approach: you have to study the markets, learn to analyze a chart and so on.

We at AtoZ Markets always advise you to start with good Forex guide for beginners. For a guide on forex trading to be useful, however, it is necessary to experiment with the acquired knowledge on the platform. The advice we can give to beginners is therefore to open a trading account on a good platform (such as this one) and start operating in demo mode in order to apply the theoretical concepts on Forex that have been learned.

Forex Strategies

A good forex trading guide must contain in addition to the basic notions also strong indications on the strategies to follow. In general, there are many forex strategies that can generate substantial gains, but the most important aspect is the attitude of the trader who must be winning. It is not enough to apply a strategy to be sure of making high profits, you need to be constant and disciplined. This is one of the big problems of forex traders who often use strategies and change them as they wish. Remember that trading forex means investing in the currency markets with consistency and self-control, otherwise, it all comes down to a game.

Those who want to start but do not know which forex strategy to use can always take advantage of the great opportunity of social trading offered by eToro. It is an automatic system: just copy the trades of other traders in the community by applying their strategies consistently. Obviously, you use copy trading above all to gain experience in order to then apply what you have learned from the forex guides in full autonomy. When you hear about forex trading school you think that social trading is one of the best for all beginners. 66% of retail traders lose money when trading CFDs. You should consider whether you can face this high risk.

It is the experience on Forex that no guide can teach you, not even the best in the world.