What is forex trade? It’s the act of buying one currency while selling another, aiming to profit from changes in the exchange rate. Think EUR/USD, USD/JPY, GBP/CHF. Prices wiggle because economies breathe, banks set rates, and news hits like lightning. If you found this page through a Tradu review, you’re set for a clear, street-level tour.
Forex is a 24-hour market, five days a week. It rolls from Sydney to Tokyo to London to New York. Session overlap often brings faster moves. Liquidity is deep in major pairs. That means tight spreads and quick fills most of the time.
Trades happen in pairs. The first is the base. The second is the quote. If EUR/USD is 1.1000, one euro costs 1.10 dollars. Buy if you think the euro will strengthen. Sell if you expect the euro to slip.
You’ll hear “pips,” “lots,” and “spreads.” A pip is the usual fourth decimal place in most pairs. Some brokers show fractional pips too. A standard lot is 100,000 units. A mini is 10,000. A micro is 1,000. The spread is the gap between bid and ask. That gap is a cost.
A quick example. You buy EUR/USD at 1.1000 and later sell at 1.1015. That’s 15 pips. With a standard lot, each pip is roughly $10, so the move is about $150 before costs. With a mini lot, about $15. If the spread was 1 pip and no commission, your net is minus that cost.
Leverage adds spice and risk. It lets you control big positions with a small deposit called margin. Gains can scale fast. So can losses. A small move can wipe out an account that’s stretched too thin. Margin calls don’t care about your feelings.
Order types keep you sane. Market orders fill now. Limit orders aim for a better price. Stop orders trigger when price reaches a level. A stop-loss cuts a losing trade. A take-profit locks in gains. Use both. They build discipline even when emotions run hot.
What moves prices? Central bank policy. Interest rates, inflation prints, and jobs data. Trade balances. Politics. Natural disasters. Surprise headlines. A rate hike can boost a currency by increasing yield appeal. A weak inflation report may push it down as policy bets shift.
Two common toolkits exist. Technical analysis reads charts. Traders watch trends, support and resistance, moving averages, and candlestick patterns. Fundamental analysis tracks economic data and policy. Many blend both. One eye on the chart. One eye on the calendar.
The daily rhythm matters. London often brings volume. New York adds momentum. Asia can be quieter in major USD pairs but lively in yen and Aussie pairs. Pick your hours with intention. Sleep is part of your edge.
Risk management is your seatbelt. Keep position size small relative to your account. Many traders risk 0.5% to 2% per trade. Place stops where the trade idea is wrong, not where fear whispers. Avoid revenge trades. One loss doesn’t require payback. It requires a pause.
Costs add up. Spreads, commissions, and swaps (overnight financing) shape your bottom line. A low spread means little if slippage is wild. Test execution on a demo first. Map your average costs per pair and session.
Let’s talk myths. Fast riches? Rare. Holy grail indicator? Doesn’t exist. Perfect win rate? Not needed. A solid edge with strict risk can win over time, even with many small losses. Think batting average plus slugging, not home runs every night.
A tiny story. I once asked a trader, “Why buy EUR/USD at 3 a.m.?” He said, “London opens soon. Liquidity jumps. My setup needs that push.” The lesson landed. Time of day can make or break a pattern.
Build a simple plan. What pairs will you trade? What times? What triggers entry and exit? How will you handle news? Write it. Trade it small. Review it weekly. Keep a journal with screenshots and thoughts. Patterns in your behavior matter as much as patterns in price.
Psychology drives the wheel. FOMO presses buy at the worst moment. Fear cuts winners too early. Greed adds size after a lucky streak. Set rules ahead of time. Let the plan call the shots. Your future self will thank you.
Watch for major risks. Leverage creep. Correlated pairs multiplying exposure. Holding through high-impact news without a plan. Over-trading after a loss. Under-trading after a win due to fear of giving back. Spot these habits. Replace them with checklists and timers.
Pick a reliable broker. Look for clear fees, fast support, and strong trade execution. Test deposits and withdrawals on a small scale first. Start with a demo, then go live with tiny size. Learn how your emotions shift with real money on the line.
Keep your toolkit lean. A few indicators are fine. Price action plus one or two filters can do the job. Add tools only if they solve a specific problem. More lines on a chart do not equal more clarity.
Edge ideas to explore. Trend follow on higher time frames with pullback entries. Range trade quiet pairs with clear boundaries. Breakouts around macro events, but with defined risk. Carry trades when rate spreads justify them and volatility is calm. Each approach has seasons.
Forecasting is overrated. Scenario planning wins. “If price breaks above X with strong volume, I’ll buy. If it stalls and reverses, I’ll wait for a retest.” Short, rule-based statements beat gut feelings. Let data keep you honest.
Start small. Learn the lingo. Track every trade. Cut losers fast. Let winners breathe. That simple loop—plan, act, review—can turn noise into insight over time. And yes, coffee helps. Just don’t let caffeine place the trade for you.