ACTUAL FOREX TRADING
Common Forex Questions Answered by a Forex Trader
"You have likely heard of Forex and Forex trading, but what is it, and why is it important?
Learn the answers to your Forex questions below..."
Question: What is Forex?
Answer: Forex is the abbreviation for foreign exchange, which is the market where global currencies are bought and sold.
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Forex can sometimes be called the Foreign Exchange Market, Foreign Exchange, the Currency Market, or FX.
Currencies are constantly changing prices. The Forex market provides real-time prices of currencies.
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Unlike other financial markets, the Forex market is open 24 hours a day and has no central exchange. This means Forex is traded globally 24 hours a day!​​
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Take this free Forex Basics Course to learn more. No registration is required.
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Basic Forex Questions
Can you make money trading Forex?
What is the best way to learn Forex?
How long does it take to become a Forex trader?
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Forex Analysis Questions
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Forex Broker Questions
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Other Questions
Common Forex Questions
Question: What is Forex Trading?
Answer: Forex trading is buying and selling currencies.
The Forex market provides real-time prices of currencies. It offers the public - you and me - an opportunity to buy and sell currencies. Buying and selling currencies is called speculating or trading. Most buyers and sellers in the Forex market are speculators (traders).​
Question: Why do people trade Forex?
Answer: Currency value (or price) is continually changing. Currencies increase and decrease in value. Traders buy and sell currencies to make a profit from these price movements. They do this by purchasing a currency and then selling the currency for a higher price in the future.
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People trade and invest in the Forex market with the intent to make money.
Question: How do people trade Forex?
Answer: The Forex market is only accessible by using a Forex broker. Without a Forex broker, you cannot trade Forex. A Forex broker offers access to the Forex market.
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You can learn more about Forex brokers in my free Ultimate Guide to Forex Brokers.
Question: Can you make money trading Forex?
Answer: Yes, but most lose money.
To trade Forex profitably, you need an edge (a trading strategy) and emotional discipline.
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This website will teach you how to be a profitable Forex trader. I suggest starting with my free Forex training material. All the content is free and no registration is required.
Question: What is Spot Forex?
Answer: Spot Forex is trading in the actual exchange at the current market prices.
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There are other ways to trade Forex, such as CFDs, spread betting, and Forex options. These are easier to access and trade than spot Forex.
Question: What is the best way to learn Forex?
Answer: You should focus on the following in order: learning the basics of Forex, learning the basics of technical analysis, learning the basics of fundamental analysis, and then start practicing with a free Forex demo account. All these steps are detailed in my How to Become a Forex Trader Guide.
Question: How long does it take to become a Forex trader?
Answer: Becoming a Forex trader is not easy - it takes time, practice, and great discipline.
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You can speed up the learning process by taking my Ultimate Forex Trading Course or signing up for my Forex Mentor Program. Both options include access to a real Forex trader (me) to answer your Forex market questions.
Common Forex Analysis Questions
Question: What is technical analysis?
Answer: Technical analysis is the analysis of historical price data. It includes the study of price highs and lows and patterns. This data is usually displayed on a price chart.
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Technical analysis is broken into two forms of analysis: price action and indicators. Learn all about price action in my Price Action Trading Course and indicators in my Technical Indicator Guide.
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The purpose of technical analysis is to predict future currency prices.
Question: What is fundamental analysis?
Answer: Fundamental analysis is the analysis of economic data. It includes the study and forecast of interest, inflation, unemployment, and economic growth rates, and retail sales, balance of trade, job, PMI and other figures.
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Learn fundamental analysis in my free Forex Fundamental Analysis Course.
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The purpose of fundamental analysis is to predict future currency prices.
Common Forex Broker Questions
Question: Can I trust Forex brokers?
Answer: There are Forex broker scams and brokers that cannot be trusted. You must be careful.
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Ensure you trade using a well-regulated broker. I have my broker recommendations here. These are brokers I personally trade with. They are strongly regulated.
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Learn more about Forex brokers and find a genuine broker in my Forex Broker Guide.
Question: What is leverage?
Answer: Trading with leverage is trading on margin, i.e. funding only a portion of your open positions.
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Leverage enables a trader to make more significant returns and losses. It is a double-edged sword.
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I explain leverage in detail, including the advantages and disadvantages of leverage, in my Forex Leverage Guide.
Question: What is a limit order?
Answer: Different brokers use different terminology. Generally speaking, limit and stop orders are orders to open a trade at a specific price in future. On MT4, the orders work as follows:
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Buy limit - an order to buy at a specific price that is below the current price
Sell limit - an order to sell at a specific price that is above the current price
Buy stop - an order to buy at a specific price that is above the current price
Sell stop - an order to sell at a specific price that is below the current price
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Entering a trade at the current price (instant execution), is generally called buying at the market, one-click trading, or market execution.
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If you are using MetaTrader, I have a Complete MT4 Guide, which covers all the basics for free.
Question: What are swap rates?
Answer: Swap rates (rollover rates) are the interest paid or earned when holding a Forex position overnight.
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Swap rates are usually applied every weekday (Wednesday receives a three-day rollover as it includes the weekend rates).
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The overnight rate is based on interest rates.
Question: What are CFDs?
Answer: CFDs are an abbreviation of contracts-for-difference. They are an over-the-counter product, meaning they're not traded on an exchange but managed in-house by Forex brokers.
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If you trade with a well-regulated broker, there is nothing untrustworthy or wrong with trading CFDs. I mainly trade CFDs and spread bet. I've been doing this since 2012 and I've never had any issues.
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I have a list of trustworthy CFD Forex brokers here.
"If you want to learn to trade Forex successfully, I suggest you follow my free content. When you're ready, consider my Forex Coaching Program"
What do you need to trade?
Question: What do you need to trade Forex?
Answer: What you need to start trading:
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A desktop computer or laptop. A phone or tablet will not be enough for serious analysis.
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A phone or other device to manage trades while on the go.
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A broker. I use several brokers. I have a page for recommended brokers offering free practice accounts.
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Charting software. Most brokers offer their own charting package and trading platform. However, I use TradingView. Open a free account with TradingView.
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Excel. I use this for note-taking, tracking economic indicators, and journaling.
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A mentor. You will need to learn from someone. I offer lots of content for free. Start with Forex basics.
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As you become more experienced, you will also need:
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An economic calendar. You must be aware of upcoming market-moving news. I use the free calendar at Trading Economics.
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A pip calculator. You must calculate your position size before entering every trade. To do this, use a pip calculator. I use the free pip calculator at myfxbook.
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A performance tracker. Your broker may offer some sort of performance and account analysis. If they don't consider using myfxbook or Forex Factory. You must have a way to track your trading performance, including drawdowns, win rates, average winners and losers, and your overall performance.