Complete Forex Basics Guide丨FX Killer丨Professional Trader Training, Forex Trader Training

What is Forex Trading?

Forex Trading, also known as Foreign Exchange Trading or FX Trading, refers to the investment activity of buying and selling different countries' currencies to profit from exchange rate fluctuations. The Foreign Exchange Market (Forex or FX) is the world's largest and most liquid financial market.

💡 Core Concept

The essence of forex trading is value exchange between currency pairs. For example, when you trade the EUR/USD currency pair, you are actually buying euros with dollars (going long), or buying dollars with euros (going short). Exchange rate fluctuations are your source of profit.

Scale of the Forex Market

According to the Bank for International Settlements (BIS) 2022 data, the global forex market's average daily trading volume exceeds $7.5 trillion, which is dozens of times the trading volume of global stock markets. This enormous liquidity means:

✓Fast order execution with minimal slippage
✓Extremely tight bid-ask spreads, low trading costs
✓Market is difficult to manipulate, prices are fair and transparent

How the Forex Market Works

24-Hour Continuous Trading

Unlike stock markets, the forex market is a decentralized global market, connecting banks, brokers, and traders worldwide through electronic networks. Due to global time zone differences, the forex market operates 24 hours continuously (Monday to Friday).

Trading Session	Open Time (Beijing)	Characteristics
Sydney Session	06:00 - 15:00	Lower liquidity, smaller volatility
Tokyo Session	08:00 - 16:00	Asian currency pairs active
London Session	15:30 - 00:30	Highest volume, high volatility
New York Session	20:30 - 05:00	USD pairs most active

⚡️ Pro Tip: Best Trading Times

The London-New York overlap (20:30-00:30 Beijing time) is the golden trading period with highest liquidity and volatility. Over 50% of forex trades occur during this session, ideal for day trading and short-term strategies.

Market Participants

The main participants in the forex market include:

🏦 Central Banks

Control money supply, intervene in exchange rates to maintain economic stability

🏢 Commercial Banks

Provide currency exchange services for businesses and individuals

🏭 Corporate Institutions

Multinational corporations conducting international trade settlement and hedging exchange rate risks

👤 Individual Traders

Conduct speculative trading through broker platforms, seeking exchange rate profits

Currency Pairs: The Basic Trading Unit

Forex trading always occurs in the form of Currency Pairs. A currency pair consists of two currencies, for example EUR/USD (Euro/US Dollar).

📐 Currency Pair Structure

Base Currency: The first currency in the pair, fixed at 1 unit

Quote Currency: The second currency in the pair, representing the amount needed to purchase 1 unit of the base currency

Example: EUR/USD = 1.1000

Means 1 Euro = 1.1000 US Dollars

Major Currency Pair Categories

1. Major Pairs

Seven currency pairs containing USD with the largest trading volume, accounting for over 80% of global forex trading:

• EUR/USD (Euro/USD) - Highest volume
• USD/JPY (USD/Japanese Yen)
• GBP/USD (British Pound/USD)
• USD/CHF (USD/Swiss Franc)
• AUD/USD (Australian Dollar/USD)
• USD/CAD (USD/Canadian Dollar)
• NZD/USD (New Zealand Dollar/USD)

2. Cross Currency Pairs

Currency pairs that do not contain USD, such as EUR/GBP, EUR/JPY, GBP/JPY, etc.

3. Exotic Currency Pairs

Currency pairs containing emerging market currencies, such as USD/TRY (USD/Turkish Lira), USD/ZAR (USD/South African Rand). Lower liquidity, wider spreads.

💡 Beginner Recommendation

Beginners should start trading with major currency pairs, especially EUR/USD and GBP/USD. They have the highest liquidity, lowest spreads, and most abundant analytical resources, making them ideal for learning and gaining experience.

Core Trading Terminology

Mastering the following terms is key to understanding forex trading:

Pip (Point in Percentage)

The smallest unit of price movement in forex. For most currency pairs, 1 pip = 0.0001. For example, if EUR/USD rises from 1.1000 to 1.1050, it has risen 50 pips.

Practical Example:Trading 1 standard lot of EUR/USD, each pip is worth approximately $10. A 50-pip movement means $500 profit or loss.

Spread

The difference between the Ask price and Bid price, which is the broker's main source of income. Major currency pair spreads typically range from 0.5-2 pips.

Formula:Spread = Ask Price - Bid Price

Lot Size

Standard units of forex trading:

• Standard Lot: 100,000 units of base currency
• Mini Lot: 10,000 units
• Micro Lot: 1,000 units

Leverage

Allows traders to control larger positions with smaller capital. Common leverage ratios: 1:50, 1:100, 1:500.

Example:100:1 leverage means you can trade a $100,000 position (1 standard lot) with $1,000.

Margin

The minimum capital required to open a position. With leverage, Margin = Position Size ÷ Leverage Ratio.

Calculation Example:1 standard lot EUR/USD (value $100,000), using 100:1 leverage, required margin = $100,000 ÷ 100 = $1,000.

⚠️ Stop Loss

A pre-set automatic exit price to limit losses. This is the core tool of risk management, and every trade must have a stop loss.

How to Trade Forex?

Trading Directions

Forex trading has two basic directions:

📈 Going Long (Buy)

Buy the base currency, expecting it to appreciate against the quote currency.

Example:

Buy at EUR/USD = 1.1000 → Price rises to 1.1050 close → Profit 50 pips

📉 Going Short (Sell)

Sell the base currency, expecting it to depreciate against the quote currency.

Example:

Sell at EUR/USD = 1.1000 → Price falls to 1.0950 close → Profit 50 pips

Trading Process (5 Steps)

Choose Currency Pair

Select target currency pair based on market analysis and trading strategy. Beginners recommended to start with EUR/USD.

Analyze Market

Use technical analysis (charts, indicators) and fundamental analysis (economic data, news) to determine price trends.

Set Trading Parameters

Set lot size, stop loss, take profit. Follow risk management principles: single trade risk not exceeding 1-2% of account capital.

Execute Trade

Place order through trading platform (e.g., MT4/MT5). Confirm order type: market order (immediate execution) or pending order (executes at specified price).

Monitor and Close

Track position, adjust strategy based on market changes. Automatically close when hitting stop loss or take profit, or manually close to lock in profits.

Practical Tips for Beginners

✅ Do These

•Start with demo account, practice at least 3 months
•Create trading plan and execute strictly
•Set stop loss for every trade
•Keep single trade risk within 1-2%
•Maintain trading journal, learn from experience
•Continuously learn technical and fundamental analysis

❌ Do Not Do These

•Enter real market without sufficient learning
•Use excessive leverage (recommended ≤1:100)
•Invest money you cannot afford to lose
•Emotional trading (chasing highs and selling lows)
•Frequently switch trading strategies
•Ignore risk management

🎯 FX Killer Recommended Learning Path

📚

Stage 1: Theoretical Learning (2-4 weeks)

Master forex basics, trading terminology, market mechanisms

🎮

Stage 2: Demo Trading (2-3 months)

Test strategies in demo account, build trading system

💰

Stage 3: Small Live Account (1-2 months)

Practice with small capital, adapt to real market psychological pressure

🚀

Stage 4: Systematic Trading (Ongoing)

Refine trading system, achieve consistent profits, gradually scale up capital