How to Trade Forex Online

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Plus500 4.5/5

CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

This information is NOT relevant to EU residents who are to be serviced by EU subsidiaries of the Plus500 Group, such as Plus500CY Ltd, authorised by CySEC (Reg. 250/14). Different regulatory requirements apply in Europe such as leverage limitations and bonus restrictions.

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CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

This information is NOT relevant to EU residents who are to be serviced by EU subsidiaries of the Plus500 Group, such as Plus500CY Ltd, authorised by CySEC (Reg. 250/14). Different regulatory requirements apply in Europe such as leverage limitations and bonus restrictions.

In this beginner’s guide we explore the basics of forex, provide a starting point for how to trade forex, and offer useful information like how the market works, to the different ways to speculate on currency prices.

In order to get started in forex trading, you first need to understand two fundamental pieces of information first: what the market is and how does it work, and how to interact with it to perform trades.

What is the forex market?

The forex market (also known as FX or foreign exchange) is a global marketplace where national currencies are exchanged. Because nations now trade worldwide cross-border, currency exchange is vital to the functioning of all markets.

The currency market is the world’s largest and most liquid financial market with an average daily trading volume of over $7.5 trillion[1].

Operating 24 hours a day across global financial hubs, the forex market allows participants, including banks, corporations, governments, and individual traders to buy, sell, and speculate on currency values, making it a cornerstone of the global economy.

How does the forex market work?

The forex market operates through a network of banks, brokers, institutions, and individual traders worldwide, connected via electronic trading platforms. Unlike the stock market which has a central exchange, the forex market does not; instead, currency pairs are traded over-the-counter (OTC) directly between participants.

The value of a currency is influenced by macroeconomic factors such as interest rates, inflation, political stability, and economic performance. In the short term, speculation often impacts price. Forex is traded globally with major trading centers in London, New York, Tokyo, and Sydney providing 24-hour market access.

For retail traders like you, trading takes place through online platforms provided by brokers. These brokers act as intermediaries between individual traders and the wider market. They allow you to speculate on currency price movements using leverage, which allows for larger positions with a smaller amount of invested capital.

While retail forex trading is big business, in the grand scheme of things it is tiny, and makes up a mere 5.5% of the total forex market volume[2] globally. Although retail trading is a small portion of the overall market, it is still significant enough to influence liquidity and price movements.

Most retail traders focus on the most liquid currency pairs, like EUR/USD, GBP/USD, and USD/JPY, which offer tighter spreads and more predictable volatility.

What are forex brokerages?

Forex brokers are essentially platforms that allow traders to interact with the market. They provide access to live forex rates, analytics, charting, indicators, and news based tools so that traders can assess the way the market is moving.

In the past, these would have been actual people who perform a trade for you, however modern technology has made retail-trading accessible to all via forex apps.

When a trade is placed, a broker executes the trade ‘communicating’ it with the wider exchange market. Live data and systems reconcile the price change so it reflects on the entire market, so that the latest prices are updated. This is happening all the time, via thousands of brokers, across millions of transactions, consistently, in real-time.

Choosing a forex broker is an essential step when it comes to trading currencies. You can find a selection of the best forex brokers to get started with in 2025 below. Click on any of the links to register an account and start trading forex now.

4.5

Plus500

Min. Deposit $100

Fees From 2%

No. assets 2800+

Demo account Yes

Visit site

Plus500 review

CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

This information is NOT relevant to EU residents who are to be serviced by EU subsidiaries of the Plus500 Group, such as Plus500CY Ltd, authorised by CySEC (Reg. 250/14). Different regulatory requirements apply in Europe such as leverage limitations and bonus restrictions.

4.6

eToro

Min. Deposit $100

Fees 1%

No. assets 50+

Demo account Yes

Visit site

eToro review

51% of retail CFD accounts lose money. Your capital is at risk.

4.6

eToro

Min. Deposit $100

Fees 1%

No. assets 50+

Demo account Yes

Visit site

eToro review

Centralised systems operate cross-border, and brokers allow retail traders like you and me to interact with that system in order to profit from the free market.

How to trade forex online – a step-by-step guide

The forex market can look intimidating but the act of trading is fairly straightforward. This step-by-step guide takes you through the basics of how to get started.

1. Find a broker. You have to place trades through a broker. Look for one that’s regulated and which has a good reputation. Then you need to create an account, which means providing some personal information, and deposit some money into it before you can do anything else.
2. Choose a currency pair. The first decision you have to make is which coins you want to buy and sell. Each currency pair falls into one of three camps, which are known as ‘majors’, ‘minors’, and ‘exotics’. The major pairs are the US Dollar with other leading currencies, like the British Pound or the Euro. It’s best to start with these as they’re easiest to understand and have the most trading volume.
3. Choose your trading method. There are two main ways to trade forex: on the ‘spot’ market or with contracts for difference (CFDs). Practically, these are almost identical but CFDs are a bit easier to get to grips with for beginners. You can be ‘long’ or ‘short’ a currency pair with CFDs and you can see profit/loss and settle your trades all in the same currency (normally USD).
4. Decide whether to go long or short. Research the factors that affect the price of the two currencies you’re exposed to and use that to decide which one is likely to do better. If you’re trading the USD/GBP pair and you expect the dollar to perform better, you should ‘long’ (buy) the pair, for example, while if you think the pound might do well instead, then ‘short’ (sell) it.
5. Set your position size. In the forex market the minimum trade size is normally $1,000, which is known as a ‘micro lot’. The standard lot size is $100,000 and you might find some platforms that offer ‘nano’ lot sizes that are just $100. Most traders don’t actually put this amount of money down every time they open a position, though, instead you can put a smaller amount down and use leverage to get to at least the value of a micro lot.
6. Execute trade. All that’s left is to execute the trade. You should see it show up as one of your open positions, and you can monitor its fluctuations in real time. Each point of movement in forex is known as a ‘pip’. Pips normally refer to $0.0001 and are how we monitor currency price changes. Remember that if you’re using leverage to multiply the size of your trade, even a single pip can be important.
7. (Optional) Set order limits. Stop loss limits are trades that execute automatically whenever the price hits a certain level and are particularly useful in the forex market where you’re using leverage and need to manage your risk carefully. You can set limits above your buy price to close your positions and lock in profits at a certain point or set them below in order to reduce your losses if the price falls dramatically.

Trading forex for beginners

The most important thing to do before you start is research. The forex market is fast-moving, works differently, and is affected by very different factors compared to other asset classes like stocks or commodities. Keep reading to find out what else you need to keep an eye on.

What to do before starting to trade

There’s a lot more to forex trading than just buying and selling pairs. You should set guidelines for yourself and make sure you’re prepared before you put any money on the line. Here’s a checklist of things to do before you get going.

• Research the currency pair. Make sure you understand the factors that affect how currencies rise and fall in relation to each other. For example, when each country releases economic data like interest rates or its balance of payments that might impact the value of its currency.
• Read up on forex terminology. The foreign exchange market has its own language and you need to know what it all means. Here’s a quick run down of the key terms and you can follow the links to learn about each in more detail.
  • Pip stands for ‘percentage in point’ and is the smallest amount a currency price can change. For pairs that are denominated in US Dollars, it refers to $0.0001.
  • A lot is the size of your trade and is usually made up of a fixed amount of currency. The standard size is $100,000 but there are now smaller lot sizes available, all the way down to $100.
  • The majors are the most popular currency pairs that make up the vast majority of forex trading volume. The six pairs that make up the majors include the US Dollar with the Euro, Japanese Yen, British Pound, Swiss Franc, Australian Dollar and Canadian Dollar.
  • The minors are all other combinations of leading currencies
  • Exotics are pairs that include much smaller currencies, such as the Norwegian Krone or Thai Baht. They tend to be harder to trade and the price is more volatile.
  • Base and quote currency simply refers to the two currencies in a pair, such as USD/GBP. In that example, USD is the base and GBP is the quote.

• Set a budget. Never risk more than you can afford to lose. It’s a good idea to set yourself some limits on how much you want to spend before you start. That way, you won’t be tempted to overreach or chase losses if things turn against you.
• Decide on a trading strategy. Forex traders fall into two camps depending on whether they base their decisions on technical or fundamental analysis. Technical is favoured by the most active traders, who study price data in order to predict future moves. The alternative is a more fundamental approach, where you use economic indicators such as interest rates or inflation to guide you.
• Choose a broker. Every broker is different and has its own pros and cons. You can find one with low trading fees or one with a set of the most advanced trading features. Decide what’s most important to you and use that to help pick a broker.

The different ways to trade

When it comes to the act of trading itself, there are a few ways to get involved in the forex market. Brush up on all of them by reading the list below so that you’re informed enough to decide what’s best for you.

• ‘Spot’ trading CFDs. Contracts for difference are contracts between you and your broker that represent the price of a particular asset and the ‘spot’ price is the current market price. When you trade a CFD your profit is the difference between the spot price when you bought the CFD compared to that at which you sell it. They’re ideal for short term traders and popular in the forex market, because you can use them to open and close positions quickly, and use leverage to make bigger bets each time. Learn about the best cfd trading brokers here.
• Spread betting. When you spread bet you make a prediction that the price is going to move in a certain direction and stake a fixed amount per point of movement. Your profit is the stake multiplied by the number of points moved (and it also works the other way: if you’re wrong the loss is the stake times by the movement). Learn about the best spread betting brokers here.
• Futures contracts. A futures contract is an agreement to buy an asset at a fixed price at a set date in the future. The key point to remember is that as soon as you enter into a futures contract you’re obligated to buy the currency on the specified date. Although they’re more traditionally used in the commodities market, futures are an ideal way to trade if you’re expecting something to have a significant impact on the price in the near future. 

Should I start trading forex now?

It depends on your level of trading expertise and knowledge of how the market works. Forex trading can have a steep learning curve and so can be risky if you don’t know what you’re doing. To help you decide whether forex is for you, here is a summary of its most important pros and cons.

Forex strategies for beginners

Forex trading for beginners can often be complex and overwhelming with so much information available online. To navigate the market effectively, it’s recommended that beginners start with a few foundational strategies that simplify decision marking and risk management. Here are three popular strategies suitable for new forex traders.

Trend following

Trend following is a strategy that involves identifying and trading in the direction of the prevailing market trend. The idea is to enter a trade when the market is moving in a clear direction and ride the trend as long as it continues. There are lots of ways to identify a trend from moving averages to trend lines. Although the easiest is to look for a series of highs, lows, higher highs, and higher lows (or vice versa).

1. Identify the trend. Use indicators like moving averages or trendlines to determine the market’s direction.
2. Entry point: Enter a trade when the trend is confirmed. Use a pull back for a better entry.
3. Exit point: Close the trade when the trend shows signs of reversal or weakening.

For example, if the EUR/USD currency pair is showing higher highs and higher lows, you might buy the pair (long position) to follow the uptrend.

Range trading

Range trading is when you buy at support levels and sell at resistance levels. This strategy is useful when the market is moving sideways and not trending strongly in one direction. Identifying a range can be fairly simple and all you need to do is determine support and resistance.

1. Identify the range: Determine the support (lower boundary) and resistance (upper boundary) levels where the price typically reverses.
2. Entry points: Buy near support and sell near resistance.
3. Exit points: Close trades when the price hits the opposite boundary.

In the USD/JPY pair, if the price consistently bounces between 110.00 (support) and 112.00 (resistance), you might buy at 110.00 and sell at 112.00.

Breakout trading

Breakout trading focuses on entering a trade when the price breaks through a significant support or resistance level, signaling a potential strong move in the direction of the breakout. In the example above, you first need to identity a range and then wait for the price of the market to ‘breakout’ of the range.

1. Identify key levels: Look for significant support or resistance levels where price has historically reversed.
2. Entry point: Enter a trade when the price breaks through these key levels.
3. Exit point: Set targets based on the strength of the breakout and monitor for potential reversal.

If the GBP/USD pair breaks above a resistance level at 1.3000, it may signal a new upward trend, and you could enter a long position.

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