Are you a beginner who has seen hundreds of influencers making money with Forex trading, and you think you are missing out? Well, you are not alone. 

Forex trading has been around for centuries. The era of online trading began in 1996. Since then, the total forex market has reached over $6.6 trillion in volume a day. 

Trading is not as easy as it seems. You win the trades, you have to learn deep technical analysis, strategies, and fundamentals. 

In this article, we will guide you through the basics of forex trading. Without further ado, let’s dive into it. 

In simple terms, Forex trading, also known as FX, is defined as the foreign exchange market, where individuals can trade one currency for another to make a profit. It is simple math. When you have a dollar in your wallet and you want to trade it for pesos, you will get 18.58 pesos, according to the current exchange rate. 

The most traded pair in the forex market is EUR/USD, equivalent to 37% of the total market trading activity. When trading in the forex market, you need to choose a lot size, which refers to the amount of currency you are buying or selling. 

For example, if you’re trading the EUR/USD pair and you choose one standard lot, you’re buying 100,000 euros while selling the equivalent amount in US dollars. There are also smaller lot sizes, like mini lots (10,000 euros) and micro lots (1,000 euros), which are great for beginners. We will understand this much better in the next phase. 

Here are the fundamentals of forex trading, which you must acknowledge before stepping into trading: 

So what exactly is a pip? Think of it as the smallest price movement in a currency pair. Most of the time, a pip is the fourth decimal place in a currency quote. For example, if EUR/USD moves from 1.1234 to 1.1235, that’s a one pip movement.

Here’s where it gets a bit tricky, though, the Japanese yen pairs are different. Since the yen is much weaker than other major currencies, pips are measured in the second decimal place. So if USD/JPY moves from 110.25 to 110.26, that’s one pip.

Why does this matter? Well, pips help you calculate your profits and losses. If you buy EUR/USD and it moves 20 pips in your favor, you know exactly how much you’ve made based on your position size. Most brokers will show you pip values automatically, but it’s good to understand the concept.

Lot size is basically how much currency you’re trading. In forex, we don’t usually trade individual units – we trade in lots. The standard lot size is 100,000 units of the base currency. So if you’re trading EUR/USD, one standard lot means you’re controlling 100,000 euros.

But don’t worry, you don’t need $100,000 to trade a standard lot. That’s where leverage comes in (we’ll talk about that more later). Most retail traders actually use smaller lot sizes:

• Mini lots: 10,000 units
• Micro lots: 1,000 units
• Nano lots: 100 units (some brokers offer these)

The lot size you choose affects how much each pip movement is worth. With a standard lot in EUR/USD, each pip is worth about $10. With a mini lot, each pip is worth about $1. This is why position sizing is so important – it determines how much risk you’re taking on each trade.

The spread is the difference between the bid price and the ask price. The bid is what buyers are willing to pay, and the ask is what sellers want. The spread is basically the broker’s fee for facilitating your trade. Our platform, OnsaFX, charges only 0.1 pips for its Elite user account, offering an affordable spread and zero commission. 

Let’s say EUR/USD has a bid of 1.1234 and an ask of 1.1236. The spread is two pips. This means as soon as you enter a trade, you’re already down by the spread amount. If you buy at 1.1236, the price needs to move above 1.1236 for you to be profitable.

Spreads can vary quite a bit. Major currency pairs like EUR/USD usually have tighter spreads (maybe 1-3 pips), while exotic pairs might have spreads of 10 pips or more. Also, spreads tend to widen during news events or when liquidity is low, like during the Asian session overlap periods.

An economic calendar is like a roadmap of upcoming news events that could move the markets. It shows when important economic data will be released, like employment numbers, inflation reports, central bank meetings, and GDP figures.

Each event usually has an impact rating – high, medium, or low. High-impact events can cause major price swings, sometimes 50-100 pips or more in just a few minutes. That’s why many traders either avoid trading during these times or specifically trade the volatility.

Some key events to watch out for:

• Non-farm payrolls (first Friday of each month for USD)
• Central bank interest rate decisions
• Inflation data (CPI)
• GDP releases

The calendar will also show the previous number, the forecast, and then the actual number when it’s released. If the exact number differs significantly from the estimates, expect some market movement.

Currency pairs are pretty straightforward – you’re always trading one currency against another. The first currency is called the base currency, and the second is the quote currency. So in EUR/USD, EUR is the base and USD is the quote.

There are three main categories:

Major pairs include the most traded currencies: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD, and NZD/USD. These usually have the tightest spreads and most liquidity.

Minor pairs (or cross pairs) don’t include the US dollar, such as EUR/GBP, GBP/JPY, EUR/CHF, etc. They might have slightly wider spreads, but are still pretty liquid.

Exotic pairs match a primary currency with an emerging market currency like USD/TRY or GBP/ZAR. These can have much wider spreads and can be more unpredictable.

When you buy a currency pair, you’re buying the base currency and selling the quote currency. So if you buy EUR/USD, you’re betting that the euro will strengthen against the dollar. Find out more about Forex markets on OnsaFX.

While technical analysis looks at charts, fundamental analysis looks at the bigger economic picture. It’s about understanding what drives currency values in the long term. 

Interest rates are probably the most significant factor. Higher interest rates typically attract foreign investment, which in turn increases demand for the currency. That’s why central bank meetings are so important to watch.

Economic growth matters too. Strong GDP growth, low unemployment, and rising inflation can all support a currency. Political stability is another big one – uncertainty can send investors running to safe-haven currencies like the US dollar or Swiss franc. Our Forex trading glossary will help you understand much more deeply about trading. 

Here are the types of markets in Forex trading. 

The spot market is a simple forex trading market, and it is easily understandable by beginner forex traders. In this market, the currency pairs are bought and sold at the current market price, which is why it’s called the “spot” market trades happen on the spot. 

For example, if EUR/USD is at 1.1000 and you decide to place an order, the order will be placed exactly in the range of 1.1000. Most retail traders (everyday forex traders) operate in the spot market because it’s fast and straightforward. 

The Forward market does not have any relation to the spot market. In this, two particular parties make a contract, also known as OTC (over-the-counter) forward contracts. 

Most retail traders (everyday forex traders) operate in the spot market because it’s fast. For example, a company in Europe that knows it will need to pay in US dollars three months from now might lock in today’s EUR/USD rate. This way, even if the exchange rate changes later, their costs remain predictable.

The futures market is quite similar to the forward market. Because of higher liquidity, it is not ideal for beginner traders. However, they are traded on centralized and regulated exchanges, which makes them trustworthy, regulated, more transparent, and easier to buy or sell compared to private forward contracts. 

Expert traders choose futures trading in forex to predict and bet on the price movements. For example, a trader could buy a EUR/USD futures contract if they believe the euro will strengthen against the dollar in the coming months. 

An economic calendar is like a roadmap of upcoming news events that could move the markets. It shows when important economic data will be released, like employment numbers, inflation reports, central bank meetings, and GDP figures.

Each event usually has an impact rating – high, medium, or low. High-impact events can cause major price swings, sometimes 50-100 pips or more in just a few minutes. That’s why many traders either avoid trading during these times or specifically trade the volatility.

Some key events to watch out for:

• Non-farm payrolls (first Friday of each month for USD)
• Central bank interest rate decisions
• Inflation data (CPI)
• GDP releases

The calendar will also show the previous number, the forecast, and then the actual number when it’s released. If the exact number differs significantly from the estimates, expect some market movement.

Forex markets open from Monday to Friday, and close on weekends (Saturday and Sunday). The forex market is divided into four major time zones: Tokyo, London, Sydney, and New York. These forex sessions are accountable for over 75% of the daily FX trading volume. 

• Sydney Session: The market is open on 10 PM Sunday (UTC) and closes 7 AM Monday (UTC). The activity in the Sydney session is generally low compared to other sessions. 
• Tokyo Session: Opens from 12 AM UTC on Monday and closes at 9 AM UTC Friday. It is ideal for Asian traders. The liquidity in this session increases as Tokyo, Japan, is the primary forex hub. 
• London Session: Opens from Monday to Friday, 8 AM UTC to 5 PM UTC. This session experiences strong price movements and huge volume. 
• New York Session: It is known as the second-largest trading session and overlaps with the London session for a few hours. It opens from 1 PM UTC on Monday and closes on 10 PM Friday. 

By keeping these sessions in mind, you can efficiently work on your trades and choose the best time frame. We advise you to trade during the London trading sessions as it is easier to predict price movements. It has lower chances of getting trapped in wrong trades. 

There are a lot of risks involved in forex trading, especially when you are a beginner. Beginners are easily vulnerable to these risks and get trapped in the market. 

Some of the common risks involved in forex trading are:

Liquidations are common in financial markets, and thousands of traders get liquidated every day with just a little bit of price movement. Liquidation is simple. It happens when your broker automatically closes the position once the market goes against you and reaches a certain price level. 

Here’s how it works: Let’s say you have $500 in your account and you decide to trade GBP/USD. You use 50:1 leverage to open a position worth $25,000. Now, if GBP/USD moves against you by just 2% (which can happen in a few hours during volatile news), you’ve lost your entire $500. At that point, your broker will automatically close your position to prevent you from incurring a negative balance.

Well, the scary part is that you can lose all your money in a single trade. Therefore, you must follow risk management tactics before taking risks in the forex market. In addition, learn about the top forex trading charts to trade more effectively. 

As a beginner, you must avoid taking high leverage in forex. However, taking leverage is beneficial and gives you good profits with small capital. Most retail brokers offer leverage ratios from 30:1 up to 500:1 or even higher. 

The problem is that most of the beginners fall into the trap of taking high leverage with small capital and end up being liquidated. 

For a beginner, stick to 1:10–1:30 leverage, use stop-loss orders, and focus on learning discipline before chasing higher gains. Practicing on a demo account provided by OnsaFX allows you to take trades and practice without risking your own money so that you can learn better. 

Trading psychology is vast, and emotions can destroy even the best trading strategies. Fear and greed are the two main culprits here.

Fear messes up a lot of things in forex trading. You might see a good trade and not enter because of fear. And greed also makes you risk too much money on single trades because you want to make big profits quickly. 95% of people lose money in trades because of bad trades, fear, and greed. 

Unauthorized and non-regulated brokers cause trouble. Some brokers experience slow order execution, particularly during volatile market periods. This can lead to slippage, where your trades are filled at worse prices than expected. 

Unregulated brokers might manipulate prices or stop hunting (artificially move prices to hit your stop losses). But that’s not the case with OnsaFX; we are a regulated broker, licensed with the Financial Sector Conduct Authority (FSCA) under license number 53192.

One of the best features of OnsaFX is that we charge zero commission and provide the lowest spread as compared to other platforms. 

Here’s what makes OnsaFX best: 

• Regulatory peace of mind: You’re trading with a broker that’s regulated by South Africa’s Financial Sector Conduct Authority (FSCA), which gives you some confidence that there’s oversight and standards in place. 
• Growing reputation in the industry: The platform has been gaining recognition, recently earning the “Fastest Growing Online Broker 2025” award, OnsaFX Awarded Fastest Growing Online Broker 2025 – Forex Daily Info, which suggests they’re doing something right and attracting more traders.
• User-friendly platform design: Their proprietary platform is designed to be user-friendly and efficient, with regular updates based on actual user feedback, so you’re not dealing with clunky or outdated software.
• Multiple account options: They offer different account types to match your trading style and experience level, whether you’re just starting or you’ve been trading for years.
• Active platform maintenance: The trading platform gets frequent updates for reliability and new features, so you’re less likely to deal with technical issues or feel like you’re missing out on newer trading tools.

Note that, as with any trading platform, it’s important to do your own research and consider the risks involved in forex and CFD trading before getting started.