What is Forex? Forex Trading Guide for Beginners in 2025

The foreign exchange market is one of the largest financial markets with the highest trading volume in the world. According to statistical reports, the average daily trading volume worldwide in the Forex market this year is approximately $7.5 trillion. For this reason, learning how to teach beginner forex trading is a worthwhile option to consider because this market has abundant liquidity and a variety of trading tools that open opportunities for many investors to participate.

Understanding the Basics of Forex Before Getting Started

Forex is the buying and selling of currencies.

How to teach beginner forex trading should start with understanding what Forex trading means. It primarily involves trading foreign currencies. Each currency does not have a fixed price alone; instead, prices are determined by comparing them with other currencies, called “currency pairs.”

For example, EUR/USD means that when you buy this pair, you are buying euros and selling US dollars. If the price is shown as 1.10, it indicates that you need $1.10 to buy 1 euro. In the structure of currency pairs, the first currency (EUR) is called the Base Currency, and the second currency (USD) is called the Quote Currency.

What else is there besides real trading in the Forex market?

Sometimes people use the term “Forex” to refer to trading other asset classes on trading platforms, such as gold, commodities, stocks, or indices. To clarify, true Forex refers to trading currencies, which can be done through various instruments such as spot markets, futures trading, or contracts for difference (CFDs).

Advantages of Forex Trading You Should Know

The Forex market is popular among investors worldwide for several reasons:

Abundant liquidity: This market has a huge number of participants, making it easy for you to buy and sell at desired prices and volumes. This is a key condition that helps traders enter and exit positions smoothly.

24-hour market operation: Forex operates almost 24 hours from Monday to Friday, allowing traders to choose convenient times for themselves.

Opportunities for profit in both bullish and bearish markets: Whether the market moves up or down, traders can generate profits by choosing appropriate strategies.

Use of leverage (Leverage): CFDs and other tools allow traders to control large amounts of money with a smaller initial capital.

Benefits for both speculation and hedging: Investors can use Forex for short-term profit or to hedge their portfolios invested in foreign assets.

What factors drive price changes?

Forex trading is affected by various factors that can create volatility in exchange rates:

Central bank policies and decisions: These organizations influence the market through interest rate adjustments and money supply controls. Central banks of major countries like the US, Japan, and the Eurozone have particular influence.

Economic data: Figures such as inflation rates, trade balances, employment data, and GDP growth indicate the health of the economy and the strength of the currency.

Cross-border investment flows: Trade policies, elections, political events, or industry changes can bring investment money into or out of a country.

Global market conditions: Movements in stock markets, bonds, and commodities affect currencies. For example, rising oil prices may impact the USD/CAD pair.

Safe-haven assets: During times of high risk, investors tend to turn to more stable currencies like the US dollar and Japanese yen.

Different ways to trade Forex

There are three main types that general investors can choose from:

Option 1: Spot Trading

This is the most straightforward method—you buy one currency and sell another. When exchange rates change, you can convert back and realize profits or losses.

Advantages: Simple, no complicated steps.

Disadvantages: Requires full capital, storage costs, high spreads, not suitable for short-term trading.

Option 2: Futures Contracts

These are traded on official markets such as the CME in Chicago. With better liquidity, online order menus, leverage options, and nearly 24-hour trading hours.

Advantages: High liquidity, almost 24-hour trading, leverage available.

Disadvantages: Contract sizes are often large, requiring significant capital for beginners.

Option 3: CFDs Trading

Contracts for Difference (CFDs) are derivative instruments that allow you to speculate on price differences. Many retail traders prefer this method because of its flexibility, nearly 24/5 operation, leverage, and low initial investment.

Advantages: Most flexible, low capital requirement, quick profit potential.

Disadvantages: High risk, especially with high leverage; requires strict risk management.

Which currency pairs are suitable for beginners?

Your success depends on choosing the right currency pairs.

Liquidity: The first consideration—highly liquid pairs (such as EUR/USD, GBP/USD, USD/JPY) allow you to enter and exit at desired prices.

Volatility: Too low volatility makes timing difficult, but too high makes risk control hard. Choose something in the middle.

Trading hours: Although the Forex market is open 24 hours, the local market hours of (Asia, Europe, America) are important for liquidity and volatility.

News and events: Some traders prefer trading when major economic news occurs. Choose currency pairs affected by the news you follow.

For beginners, consider the main pairs:

• EUR/USD: The most liquid pair, moderate volatility. Suitable for short- and medium-term trading. Moves most when European and US markets open.

• USD/JPY: Good liquidity, low to moderate volatility, but can increase due to Japanese central bank policies. High trading volume when Tokyo and New York markets open.

• GBP/USD: Good liquidity, slightly high volatility. Moves most during European and US market hours.

Forex trading steps for beginners

Learn how to teach beginner forex trading with these steps:

Step 1: Choose your currency pair

Check your conditions. Find currency pairs that match your potential. Remember, there are over 60 pairs available for trading. However, beginners should focus on high-liquidity main pairs.

Step 2: Open a position

Check current prices and analyze technically via your trading platform, then place your order.

• Buy order: If you think the currency will strengthen and the price moves as expected, you will profit. If wrong, you will incur a loss.

• Sell order: If you think the currency will weaken, profit occurs if the price drops. If the currency strengthens, you will lose.

Step 3: Set conditions

Place Limit Orders to trade when the price reaches your desired level. Set Stop Loss to automatically close your position if losses occur.

Step 4: Monitor and close positions

Track price changes and margin levels. Close positions to realize profits or accept losses.

Step 5: Evaluate and improve

Review your trades. Find what works well, improve what doesn’t, and repeat successful strategies. As a famous investor said, “Make it a habit to do what works”—this is the basic formula.

Forex trading warning

Forex trading carries high risk, especially when using leverage. Consider these tips:

Avoid excessively high leverage: High leverage can increase profits but also amplifies the risk of losses. Choose a level suitable for your capital and risk tolerance.

Be prepared for volatility: Today, Forex prices can fluctuate significantly during central bank meetings or economic data releases. Set Stop Loss carefully and avoid highly volatile times.

Do not trade excessively: Over-trading can lead to missed opportunities and unnecessary losses. Trade only when you have a planned entry point.

In summary

This is an introduction to how to teach beginner forex trading. Forex trading is popular among investors worldwide. Many traders prefer CFDs because they require less initial capital, offer flexibility, and support various strategies.

It is a market that allows traders to generate profits, test new strategies, and hedge their portfolios easily. However, success requires education, discipline, and strict risk management.