Forex trading, short for foreign exchange trading, is the act of buying and selling currencies on the global currency market. It’s one of the most actively traded financial markets in the world, with daily turnover exceeding $7 trillion. For traders, forex offers the opportunity to profit from fluctuations in currency prices — whether those prices are going up or down.

What Is A Forex Trading?

Forex trading is the simultaneous exchange of one currency for another. This exchange happens in pairs — for example, buying the euro (EUR) while selling the US dollar (USD) creates the EUR/USD currency pair. Traders aim to profit by speculating on whether the base currency will rise or fall in value compared to the quote currency.

Key Takeaways

• Forex trading involves trading one currency against another in pairs.
• It operates 24 hours a day, five days a week.
• Forex trading is decentralised, with no central exchange.
• The market includes major players like banks, hedge funds, and retail traders.
• Profit and loss are measured in pips and calculated based on lot size and movement.

How Forex Trading Works

Currency Pairs

• Major pairs: EUR/USD, GBP/USD, USD/JPY
• Minor pairs: EUR/GBP, AUD/NZD
• Exotic pairs: USD/TRY, EUR/SEK

Example Trade

You buy GBP/USD at 1.2500 and sell at 1.2600. That’s a 100-pip gain. With a standard lot (100,000 units), that’s $1,000 profit.

Trade Sizes

• Standard Lot: 100,000 units
• Mini Lot: 10,000 units
• Micro Lot: 1,000 units

Pips and Pipettes

• A pip is the fourth decimal place in most currency pairs.
• A pipette is one-tenth of a pip (used for precise pricing).

Why People Trade Forex

• Liquidity: Massive trading volume ensures tight spreads and quick execution.
• Leverage: Trade larger positions with smaller deposits (but increases risk).
• Accessibility: Anyone can start with a computer, internet, and broker account.
• Flexibility: Trade any time of day across global sessions.
• Profit Potential: Opportunities exist in both rising and falling markets.

Fundamental vs Technical Analysis in Forex

Aspect	Fundamental Analysis	Technical Analysis
Focus	Interest rates, GDP, inflation, central banks	Price action, trends, support/resistance
Time Horizon	Medium to long term	Short to medium term
Tools Used	Economic calendars, news, macro data	Charts, indicators like RSI, MACD, Ichimoku

Case Study: Learning Forex Trading

After watching markets fluctuate for years, Josh enrolled in a CPD Certified forex programme by Traders MBA. He started practising with a demo account and focused on trading the EUR/USD during London session hours. With lessons on price action and fundamentals, Josh improved his consistency. He now manages his own account and logs each trade with risk-reward metrics — proving that structured education makes a difference.

Frequently Asked Questions

What is the meaning of forex trading?
It means exchanging one currency for another to profit from changes in exchange rates.

Is forex trading legal?
Yes, it’s legal in most countries. In the UK, it’s regulated by the FCA.

How much money do I need to start forex trading?
Some brokers allow accounts starting from £100, but £500–£1,000 is often recommended for flexibility.

Can you make money with forex trading?
Yes, but it requires skill, discipline, and effective risk management.

What platform is best for forex trading?
MetaTrader 4 (MT4), MetaTrader 5 (MT5), and cTrader are commonly used, depending on your broker.

Conclusion

So, what is a forex trading? It’s a dynamic, global marketplace where currencies are exchanged for profit. It offers liquidity, accessibility, and opportunity — but also demands strategy, education, and discipline. If you’re ready to take the first step toward trading mastery, explore our CPD Accredited Trading Courses to build your skills and confidence.