Forex trading is real! Beginner's guide for new traders 2025

The foreign exchange market (Forex) is considered one of the largest financial markets with the highest trading volume in the world. Currently, in 2024, the average daily Forex trading volume worldwide is approximately $7.5 trillion. With immense liquidity, ordinary traders can easily participate in Forex trading and have real profit opportunities. This article will guide you to understand Forex and the suitable Forex trading methods for beginners.

Know Beforehand: What is Forex?

Forex trading simply means buying and selling currencies, where each currency does not have an intrinsic price but is valued relative to other currencies. This is called Currency Pairs (Currency Pairs)

For example, USD/THB consists of two parts:

• Base Currency (Base Currency): USD - the primary currency for trading
• Quote Currency (Quote Currency): THB - the currency used for buying

This means that when trading USD/JPY at 160.00, you are buying 1 USD by selling 160 JPY. This event occurs simultaneously in a single trade.

Why does Forex attract many traders?

5 Advantages of Forex Trading

1. Very high liquidity: The massive flow of money in the Forex giant market allows traders to buy and sell at their desired prices almost all the time, with no fear of being stuck in a position.

2. Open for trading nearly 24 hours a week: You can decide when to trade, such as after work or early morning before starting your day.

3. Many options available: Traders can profit from both rising and falling prices, depending on market conditions.

4. Leverage benefits (Leverage): Some Forex products offer high leverage, multiplying your capital, but caution is needed due to increased risk.

5. Suitable for hedging and speculation: Both institutional investors and retail traders can use Forex.

What factors cause currency values to fluctuate?

Forex prices do not change randomly but are driven by various factors:

• Central bank policies: When the Fed or Bank of Japan adjusts interest rates, Forex prices respond immediately and strongly.

• Economic data: Inflation figures, employment data, current account balances—most directly impact currency values.

• Investment movements: Trade policies, elections, political turmoil—all influence international capital flows.

• Global market conditions: When stock markets fall or crises occur, investors often seek safe-haven currencies like USD or JPY.

3 Forex trading methods to choose from

1. Spot Trading (

This is the most straightforward method—buy real currencies and wait for price changes to profit from the difference.

Advantages: Simple, uncomplicated
Disadvantages: Requires full payment, storage costs, high spreads, not suitable for short-term trading

) 2. Futures Contracts

Standardized contracts traded on official markets, such as USD futures on TFEX in Thailand or EUR/USD on the Chicago Mercantile Exchange ###CME(

Advantages: High liquidity, leverage available, tradable throughout the day
Disadvantages: Large contract sizes, suitable mainly for traders with sufficient capital

) 3. CFDs on currencies ###Most popular today(

Contracts for Difference (CFDs) allow trading rights on profit from price differences without holding the actual currencies.

Advantages:

• Low initial capital
• Leverage available
• Nearly 24-hour trading
• Flexible trading styles

Disadvantages: High risk if leverage is overused, potential margin calls

How to choose currency pairs

For beginners, avoid trading exotic pairs. Instead, select pairs that:

• Have high liquidity: Easy to buy/sell, stable prices
• Moderate volatility: Not too risky but with profit potential
• Move during suitable times: Asian, European, or American markets

) Top 3 currency pairs for beginners

EUR/USD - The king of currency pairs

• Highest liquidity, moderate volatility
• Moves significantly during European and US market openings
• Suitable for both short and medium-term trading

USD/JPY - A stable but sensitive pair

• Good liquidity, low to moderate volatility
• Can be highly volatile when the Bank of Japan implements policies
• Moves actively during Tokyo-New York sessions

GBP/USD - For aggressive traders

• Good liquidity, high volatility, rapid movements
• Influenced by UK-specific factors (Brexit still causes turbulence)
• Highly active during European-US markets

Step-by-step Forex trading process

Step 1: Select currency pair and check the price

Check current prices, analyze technically on trading platforms with real-time data and analysis tools.

( Step 2: Decide to buy or sell

If expecting the currency to strengthen

• Place a Buy order
• If price rises → profit
• If price falls → loss

If expecting the currency to weaken

• Place a Sell order
• If price falls → profit
• If price rises → loss

) Step 3: Set stop-loss and take-profit points

Use Stop Loss to limit losses if the market moves against you, and Take Profit to lock in gains as planned.

Step 4: Monitor margin

Keep an eye on your margin level; avoid margin calls by maintaining sufficient funds.

Step 5: Close the position and record

Close the trade when conditions are met, and record what happened to learn for next time, following Charlie Munger’s saying: “Repeat what works”

Common pitfalls traders should watch out for

1. Excessively high leverage

Leverage multiplies profits but also losses.

• Using 1:100 leverage, a 1% market move results in a 100% gain/loss of your margin.
• Your capital can be wiped out instantly.
• Beginners are advised to start with low leverage, such as 1:10 or 1:20.

2. Not preparing for high volatility

Economic news, central bank meetings, data releases—these can cause wild Forex swings.

• Set tight stop-losses.
• Avoid trading during major news if inexperienced.
• Be prepared for potential losses.

3. Trading too frequently

Many traders try to profit from small movements multiple times a day, but most end up losing.

• Trade only when clear setups appear.
• Limit to 3-5 trades per day.
• Quality over quantity.

4. Impatient trading

Making decisions based on emotions when losing money often leads to bigger losses.

• Have a trading plan.
• Stick to the plan.
• If feeling overwhelmed, stop trading for the day.

Final truth: Can you really trade Forex?

Yes, you can trade Forex successfully, but you must understand the basics, have a clear trading plan, manage risks, and keep learning.

The Forex market handles $7.5 trillion daily—millions of traders profit from it. Why not you?

Start by studying, practicing with demo accounts, choosing the right platform, and always remember: Risk should always be manageable.

💬 For Forex traders: Success comes from accumulation