Forex is short for foreign exchange, the global market in which one currency is exchanged for another. You have used it if you converted Australian dollars for travel. Forex trading uses the same relationship, but aims to gain from an exchange-rate move.

The market is enormous. The Bank for International Settlements reported that turnover across over-the-counter foreign exchange instruments averaged US$9.6 trillion per day in April 2025. That figure covers the wider institutional market, including spot, swaps, forwards and options. It is not a measure of retail CFD trading alone.

Retail traders generally access forex through a broker. With a forex CFD, you speculate on the movement of an exchange rate without taking delivery of the underlying currencies. This makes it possible to take a long or short position, but the product is leveraged and can lose money quickly. Explore the broader CFD markets you can trade before deciding whether any product fits your knowledge and risk tolerance.

Forex does not trade on one central exchange. It is mainly an over-the-counter, or OTC, market, which means transactions take place through a global network of banks, dealers, brokers, businesses and other participants. Prices from liquidity providers are distributed electronically, and a retail broker shows tradable bid and ask prices on its platform.

The market operates 24 hours a day from Monday to Friday as activity moves through Asia-Pacific, Tokyo, London and New York. Conditions change through the day. Session overlaps can bring more activity, while quieter periods may have lower liquidity or wider costs.

There is no single official forex price at every instant. Quotes can differ slightly between venues and providers because this is a decentralised market. The price available to you is the quote and execution offered through your broker for that instrument.

Currencies are quoted in pairs because buying one means selling the other. In EUR/USD, EUR is the base currency and USD is the quote currency. If EUR/USD is 1.1000, one euro is worth 1.10 US dollars.

If you expect the euro to strengthen against the US dollar, you might buy, or go long, EUR/USD. If you expect it to weaken, you might sell, or go short. The trade gains or loses as the pair moves, while spreads, commissions and overnight financing affect the result.

What are majors, minors and exotics?

Major pairs include the US dollar and another heavily traded currency. Minor pairs, or crosses, combine major currencies without the US dollar (for example, EUR/GBP or EUR/JPY). Exotics pair a major currency with one from a smaller or emerging economy and can have lower liquidity, wider spreads and sharper moves.

What is a pip?

A pip describes a small forex price change. For many pairs, one pip is 0.0001, so a move from 1.1000 to 1.1001 is one pip. For yen pairs it is usually 0.01. Its cash value depends on the pair, trade size and account currency.

What is the spread?

The spread is the difference between the bid price, at which you can sell, and the ask price, at which you can buy. It is one trading cost. Spreads can change with liquidity, volatility, the instrument and account type, so check the full cost rather than assuming the displayed minimum always applies.

Exchange rates move as supply and demand for each currency change. Markets continuously reassess the relative outlook for two economies, so a pair can move even when news concerns only one side.

• Interest rates and central banks: current rates and expectations about future decisions can change the return available on a currency.
• Economic data: inflation, employment, wages, retail spending and growth figures can alter expectations for an economy and its central bank.
• Politics and geopolitical events: elections, policy changes, conflicts and trade disputes can affect confidence, growth and capital flows.
• Market sentiment: during uncertainty, traders may move towards currencies they consider more defensive, although these relationships can change.
• Commodity and cross-market moves: some currencies can be sensitive to commodity prices, bond yields or demand from major trading partners.

A release can meet the published forecast and still move the market if traders had positioned for a different outcome. Prices can also reverse quickly as participants interpret the same information in different ways.

A contract for difference, or CFD, is an agreement to exchange the difference between an instrument’s price when a position opens and when it closes. With a forex CFD, you do not own the base or quote currency. Your profit or loss reflects the price move, trade size and costs.

CFDs use leverage, which controls a larger exposure with a smaller deposit. That deposit is margin. At 30:1 leverage, $1 of margin can support up to $30 of exposure, subject to product rules. This magnifies both gains and losses compared with the margin deposited.

If account equity falls, you may receive a margin warning or have positions closed under the broker’s margin-close-out rules. 

1. Learn the fundamentals. Understand currency pairs, pips, spreads, leverage, margin, order types and the reasons prices move.
2. Start with a demo. Use virtual funds to learn the platform and test how position size, stops and market movement affect the account.
3. Choose a regulated broker and read the documents. Check the entity, licence, Product Disclosure Statement, Target Market Determination, costs and contract specifications for the pairs you plan to trade. 
4. Build a risk plan. Decide the maximum amount at risk per trade and across all open positions. Understand that a stop-loss cannot guarantee the exact exit price.

There is no need to rush into live trading. A demo cannot reproduce the emotional effect of gains and losses, but it can show whether you understand the platform and can follow a process consistently.