How to Start Forex Trading? A Detailed Guide for Beginners in 2025

What Is Forex? The Global Market with an Enormous Scale

The (Forex/FX) foreign exchange market is becoming one of the most popular investment channels in Vietnam. But before you decide to participate, understand what it is and how it operates.

What is Forex? Broadly defined, forex includes:

• Foreign currencies: USD, EUR, AUD, and other currencies
• International payment tools: international credit cards, checks, bills of exchange
• International certificates: bonds, foreign company stocks
• Cryptocurrencies: Bitcoin, Ethereum, and other digital currencies
• Gold and precious metals: considered as tools for value preservation

However, when people mention the foreign exchange market or Forex, they usually refer to a decentralized trading venue where investors can buy, sell, and exchange different currencies. This is where major financial institutions, governments, central banks, and individual investors meet to execute transactions.

What is forex trading? Simply put, it is the activity of buying and selling currencies to profit from exchange rate fluctuations. Unlike large financial organizations trading to manage national currency reserves, individual investors like us participate with a primary goal: to capitalize on exchange rate volatility for profit.

Enormous Scale: The Forex Market Surpasses All Other Markets

To understand the attraction of Forex, look at the numbers: about 5.3 trillion USD are traded daily worldwide. This figure is dozens of times larger than the stock or bond markets.

Why is Forex so large? Because it operates 24/7, from Tokyo to New York, and it is not controlled by any single authority. No one—even central banks—can manipulate this market.

What Can You Trade on the Forex Market?

Currencies Traded in Pairs

On Forex, currencies are not traded alone but always in pairs. For example: EUR/USD, GBP/JPY, AUD/USD.

In the EUR/USD pair:

• EUR (Euro) is the base currency (base currency) – on the left
• USD (US Dollar) is the quote currency (quote currency) – on the right

Price EUR/USD = 1.1500 means 1 EUR can be exchanged for 1.1500 USD.

Major Currency Pairs Make Up 85% of Trading Volume

Although over 30 currencies are traded on Forex, only a few major currency pairs account for 85% of total trading value. These pairs have the highest liquidity:

Major pairs:

• EUR/USD (Euro/US Dollar)
• USD/JPY (US Dollar/Japanese Yen)
• GBP/USD (Pound Sterling/US Dollar)
• AUD/USD (Australian Dollar/US Dollar)
• USD/CHF (US Dollar/Swiss Franc)
• NZD/USD (New Zealand Dollar/US Dollar)
• USD/CAD (US Dollar/Canadian Dollar)

Besides Forex, you can also trade other assets on the same platform such as stock indices, commodities, gold, and cryptocurrencies.

Beyond Currency Trading: What Are CFDs?

There are two main ways to trade Forex:

1. Spot Forex Market (Spot Foreign Exchange Market)

• Transactions occur at an agreed price with settlement within 2 business days
• This is the market used by large banks and financial institutions
• In Vietnam, this type of trading is prohibited

2. Forex CFD (Contract for Difference)

• A contract between you and the broker regarding the price difference of an asset
• You do not need to own the asset itself, only predict whether the price will rise or fall
• 99% of Forex brokers in Vietnam operate this way
• Important note: To ensure safety, choose brokers licensed by international regulatory agencies such as ASIC, FCA, or CySEC

How to Make Money from Forex? Real-Life Example

Suppose you predict EUR will appreciate against USD:

Step 1: You invest 11,500 USD to buy 10,000 EUR at the rate EUR/USD = 1.1500

Step 2: Two weeks later, the rate rises to 1.2500. You sell the 10,000 EUR, earning 12,500 USD

Result: You profit 1,000 USD from the exchange rate difference.

But this is just the exciting part! In Forex, you use a tool called leverage (leverage).

The Power of Leverage: Amplify Profits

With leverage, you can trade much larger amounts than your actual capital. For example: with 200:1 leverage, you only need $60 margin to control a trade worth 11,500 USD.

However, be careful: Leverage is a double-edged sword. It can double your profits, but also double your losses.

Why Is Forex Popular? 5 Major Advantages

1️⃣ Very Low Trading Fees

No management fees or high brokerage commissions. Brokers earn only from the spread (the difference between bid and ask prices), which is usually very small.

2️⃣ Market Operates 24/7

No trading hours restrictions. You can participate anytime—morning, afternoon, evening, even while sleeping. The market is always open from Tokyo to New York.

3️⃣ No One Can Manipulate

With a daily volume of 5 trillion USD, no organization—even central banks—can control or manipulate the market.

4️⃣ Fewer Barriers to Entry

You can start with just a few hundred thousand VND in margin. No other market—(stocks, real estate, commodities)—allows this.

5️⃣ High Profit Opportunities

With leverage and large trading volume, you have the chance to earn significant profits. But risk management is essential.

Detailed Guide: 8 Steps to Start Forex Trading

Step 1: Master 8 Basic Concepts

Before trading, you need to understand these terms:

Long (Buy): Buying a currency pair expecting the price to rise. You profit when the market goes up.

Short (Sell short): Selling a currency pair expecting the price to fall. You profit when the market declines.

Leverage (Leverage): The ratio between your margin and the total trading amount. For example, 50:1, 100:1, 200:1.

Margin (Margin): The amount you need to deposit into your account to open and maintain a position.

Pip: The smallest unit of price movement. For example: EUR/USD moves from 1.2000 to 1.2005 = 5 pips.

Spread: The difference between bid and ask prices, measured in pips.

Lot: The contract size. Nano lot (100 units), micro lot (1,000 units), mini lot (10,000 units), or standard lot (100,000 units).

Slippage: When the execution price differs from your expected price, often occurring in volatile markets.

( Step 2: Learn About Types of Forex Markets

There are 5 main types of Forex trading:

Spot Forex – Trading immediately at an agreed price, settlement within 2 days )prohibited in Vietnam(

Forex CFD – Trading via contracts for difference )allowed in Vietnam, so choose brokers with international licenses###

Currency Futures – Futures contracts to exchange currencies at a specific future date (not common in Vietnam)

FX Options – Options to predict whether the price will rise or fall at a certain time (not common in Vietnam)

Currency ETFs – Exchange-traded funds tracking the relative value of currencies (not common in Vietnam)

Conclusion: In Vietnam, you can trade Forex through CFDs on reputable brokers with international licenses.

( Step 3: Choose a Reputable Broker

Criteria for selecting a broker:

• ✓ Licensed by international regulatory agencies )ASIC, FCA, CySEC(
• ✓ Low trading fees
• ✓ User-friendly trading platform
• ✓ Good customer support
• ✓ Excellent analytical tools

) Step 4: Open a Trading Account

To open an account, you need to prepare:

• ID card/CCCD (front and back)
• Active email
• Phone number
• Bank account for deposits/withdrawals

The account opening process is usually simple and takes only 10-15 minutes.

Step 5: Decide Which Currency Pair to Trade

After opening an account, you need to decide which currency pair to trade. Some factors to consider:

Country’s economic situation:

• If you believe the US economy will weaken, USD will depreciate, so sell USD
• If you believe the EU economy will strengthen, EUR will appreciate, so buy EUR

Trade balance:

• If a country exports many high-demand goods, its currency will appreciate

Political situation:

• Elections, policy changes, major political events can impact currency prices

( Step 6: Determine Margin

You don’t need to invest the full amount you want to trade thanks to leverage. For example:

• Want to trade 100,000 USD
• Broker requires 1% margin
• You only need to deposit 1,000 USD

Golden rule: Only invest 2% of your margin in a single currency pair to manage risk.

) Step 7: Decide to Buy or Sell

Based on your analysis, you will decide:

BUY ###Long### if you believe the quote will strengthen

• Profit increases as the rate rises
• Loss occurs if the rate falls

SELL ###Short### if you believe the quote will weaken

• Profit increases as the rate falls
• Loss occurs if the rate rises

( Step 8: Place Risk Management Orders

This is an extremely important step not to overlook:

Stop Loss )Cut Loss(: An automatic order to close your position if the price drops below a certain level to limit losses.

Example: Buy EUR/USD at 1.1500, set Stop Loss at 1.1400 )max loss 100 pips###

Take Profit (Lock in Profit): An automatic order to close your position if the price rises above a certain level to secure profits.

Example: Buy EUR/USD at 1.1500, set Take Profit at 1.2000

When the price hits 1.2000, the order executes automatically, locking in your profit.

( Step 9: Monitor and Adjust

• Track your trades, but avoid panic during market volatility
• Market data changes constantly, keep updated with economic news
• Stick to your strategy, avoid emotional trading
• Learn from every trade, whether profit or loss

What Factors Affect the Forex Market?

) Central Banks

Central banks control the money supply and set monetary policies. For example:

• Quantitative Easing (QE): Pump money into the economy → currency depreciation
• Interest rate hikes: Encourage investment → currency appreciation

Economic News

If a country releases good economic news ###growth in GDP, lower unemployment(, investors will pour capital in, causing the currency to appreciate. Conversely, bad news will depreciate the currency.

) Market Sentiment

If traders believe a currency will strengthen, they will buy, convincing others to follow, creating a self-fulfilling upward trend.

Geopolitical Events

Conflicts, elections, or major policy changes can significantly impact currency prices.

How Is the Forex Market Managed?

The forex market is very large and lightly regulated because there is no single governing body. Instead, many organizations oversee domestic trading in their countries:

• USA: CFTC (Commodity Futures Trading Commission) and NFA ###National Futures Association###
• EU: ESMA
• UK: FCA
• Australia: ASIC

To protect yourself, always choose brokers licensed by these agencies.

What Is the Daily Trading Volume on Forex?

5.3 trillion USD are traded daily, equivalent to 220 billion USD per hour. This massive volume includes:

• Transactions of large banks
• Transactions of financial institutions
• Transactions of individual investors
• Hedging activities of companies

An interesting statistic: Retail investors (individuals) account for nearly ⅓ of daily trading volume, about 1.7 trillion USD traded by traders like us.

Who Participates in Forex Trading?

( Governments and Central Banks Trade to manage currency reserves and implement monetary policies

) Major Commercial Banks Largest traders, often for corporate clients

( Forex Brokers Provide platforms for individual traders

) Retail Traders ###Individual Traders### People like us, trading through broker platforms

Conclusion: Forex Is an Opportunity for Those Willing to Learn

Now you understand what forex is, how the foreign exchange market operates, and how to start trading.

The forex market is the largest financial investment market in the world with clear advantages:

• ✓ Extremely low entry costs
• ✓ Low trading fees
• ✓ 24/7 operation
• ✓ Very high liquidity
• ✓ Opportunities for significant profits

However, Forex also involves high risks. Be:

• Well-educated before starting
• Strictly manage your money ###2% golden rule###
• Always use Stop Loss
• Trade on licensed international platforms
• Avoid emotional trading

With discipline and proper strategy, you can become a successful Forex trader. Start today!