You still don't understand Forex, do you? Learn how to start trading currencies correctly for new investors.

How Important Is the Currency Market?

It’s not widely recognized by most investors just how big the Forex market truly is. In 2023, the average daily trading volume of the global foreign exchange market reached $7.5 trillion USD. That seemingly unbelievable number is actually real.

Because it is highly liquid and offers a variety of risk management tools, anyone can access this market and look for opportunities to generate income with ease. No wonder people from all nationalities and all levels of experience are trying their luck here.

Forex Is Currency Trading, But That’s Not Enough

Forex trading means buying and selling foreign currencies. To understand it correctly, you need to know that each currency doesn’t have a fixed price. It must be compared to other currencies. Simply put, you exchange one currency for another. This structure is called “Currency Pairs” (Currency Pairs).

For example, USD/THB consists of the US dollar as the base currency (Base Currency) and the Thai baht as the quote currency (Quote Currency). When you buy this pair at 35.00, it means you spend 35 baht to buy 1 US dollar.

Many people confuse Forex with trading CFDs, but the true meaning covers trading in CFDs as well—whether it’s commodities, gold, stocks of individual companies, or market indices. However, to be clear, Forex is only currency trading—whether through spot transactions, futures, or CFDs.

Why Do Traders Prefer Forex?

The currency market has several advantages over others:

1. Liquidity is fundamental — If you want to buy or sell at will, often without waiting, this market is full of participants. You can almost always find the price you want.

2. Extended trading hours — Forex is open nearly 24/5, with no fixed “hours.” You can choose the time that suits you.

3. Can profit from both rising and falling markets — Whether the market goes up or down, if you see the right trend, there’s always a way to make a profit.

4. Used for diversification and speculation — Sometimes investors use Forex to hedge against other portfolios; other times, they seize opportunities to earn extra income.

5. High leverage management — Many platforms allow you to use borrowed (Leverage) to increase profit potential (but also increase risk).

What Causes Currency Prices to Change?

The Forex market is not usually calm; many factors push prices up and down:

Central Bank Policies — The most influential factor. When the US Federal Reserve changes interest rates or adjusts the money supply, the dollar can fluctuate wildly.

Economic Data — Unemployment figures, inflation, sales—all tell the story of economic strength, which in turn affects the strength of the currency.

International Capital Flows — When foreign investors move money out of a country, the currency tends to weaken.

Global Market Conditions — Events in stock markets, bond markets, oil prices all influence currency prices. For example, rising oil prices may push the Canadian dollar higher.

Global Uncertainty — When the world is in turmoil, investors seek safe havens like the US dollar and Japanese yen. Everyone wants to keep their money safe.

How to Play Forex?

For ordinary people, not corporations or large institutions, there are 3 main ways:

Method 1: Buying and selling real currencies through the spot market

The simplest way is to exchange one currency for another. After three months, if the exchange rate improves, you can exchange back and realize a profit.

Advantages: Straightforward, not complicated.

Disadvantages: Requires full capital upfront (no borrowed funds), limited currency pairs, storage costs, and often high spreads, making it unsuitable for short-term trading.

Method 2: Currency futures contracts

Standardized options traded on futures markets, such as dollar futures on TFEX in Thailand or EUR/USD futures in Chicago.

Advantages: Good liquidity, available online, leverage available, and can trade almost anytime.

Disadvantages: Contract sizes are often large, requiring significant capital. Some may find it too expensive.

Method 3: Trading CFDs on currencies

Contracts for Difference (CFDs) are derivative instruments that allow you to profit from price differences without holding the actual currencies.

Advantages: Highly flexible, tradable almost all day, leverage available, small capital required, profits from both rising and falling prices.

Disadvantages: Excessive leverage can lead to quick losses; risk management is essential.

Which Currency Pairs Should Beginners Trade?

Not all pairs are suitable.

Liquidity — Pairs with high trading volume tend to have more reliable prices, a key factor in choosing.

Volatility — Pairs with too little fluctuation are hard to trade profitably, while highly volatile pairs are difficult to control. Balance is key.

Trading hours — Although Forex is open 24/5, different pairs have “golden hours.” For example, EUR/USD tends to move most during European and US market openings.

News impact — Forex markets are sensitive to news. If you follow news closely, you can choose pairs affected by specific events.

For beginners, these are often recommended:

EUR/USD — The most traded pair globally, with high liquidity and moderate volatility. Ideal for quick trades during European and US market hours.

USD/JPY — Another good pair, with good liquidity. Although influenced by Japan’s policies (, it moves most during Tokyo and US market openings.

GBP/USD — For more volatile trading, this pair can move quickly, especially during European and US market hours.

How to Start Trading? 5 Simple Steps

) Step 1: Decide which pair to trade

Check which currency pairs match your style—whether EUR/USD, USD/JPY, or others. Look for pairs with good liquidity, reliable prices, and reasonable spreads.

( Step 2: Open your mind to buy/sell orders

Once decided, analyze the current price on your trading platform, which provides real-time data and analysis tools. Read the situation and place your orders.

Buy order — When you think the currency will strengthen. If correct, you profit; if wrong, you lose.

Sell order — When you think it will weaken. If correct, profit; if wrong, loss.

) Step 3: Set conditions for your orders

Don’t just send orders blindly. Want to protect yourself? Use Limit Orders to specify “buy/sell when the price hits this level,” or Stop Loss to “close my position if losses reach this point.”

Step 4: Monitor margin levels and close on time

Your account balance changes constantly—rising and falling. Keep track and be ready to close your position to lock in profits or cut losses before things worsen.

Step 5: Review mistakes and improve

After trading, analyze what happened—what went right, what went wrong, why money came in or out. This is how you learn. Trading involves repetition; if you find what works, keep doing it. As some top investors say, “If something works well, do it repeatedly.” That’s the essential formula.

Final Caution

Forex trading carries high risk, and here are critical points to remember:

Overleveraging — Borrowed money can amplify gains but also losses. If the market moves against you, everything can disappear quickly.

Lack of a plan during market shocks — Sometimes, the market suddenly jumps, especially when central banks announce policies or big news breaks. Without stop-loss orders or hedging, losses can be devastating.

Overtrading — Trading too often can lead to decisions based on small profits, gradually accumulating losses. Beginners should be especially cautious.

In Conclusion

Trading Forex from the start isn’t very complicated. Usually, CFDs are popular because they don’t require large initial capital, offer flexibility, and support various trading methods.

For those wanting to trade Forex, the key is choosing the right environment, managing risk carefully, and not overextending. If you do all these, the Forex market is full of opportunities for everyone.