Forex guide · 6 min read · Updated 8 October 2026

What is forex trading?

Forex explained simply: what currency pairs are, how prices move, who trades them and what it really takes to learn. Written for UK beginners.

Forex (foreign exchange, or FX) is the market where one currency is swapped for another. It is the biggest market in the world: the Bank for International Settlements estimates about 7.5 trillion US dollars changes hands every day. Banks, companies, governments and individual traders all take part.

When you trade forex you are betting that one currency will get stronger or weaker against another. You never buy “euros” on their own. You always trade a pair.

Currency pairs

A pair like GBPUSD shows how many US dollars one British pound buys. If GBPUSD is 1.3200, one pound buys 1.32 dollars.

• The first currency (GBP) is the base. The second (USD) is the quote.
• If you think the pound will strengthen against the dollar, you buy (go long) GBPUSD.
• If you think it will weaken, you sell (go short).

The most traded pairs are called the majors: EURUSD, USDJPY, GBPUSD, USDCHF, AUDUSD, USDCAD and NZDUSD. They have the most buyers and sellers, so the cost of trading (the spread) is lowest.

How you make or lose money

Prices move in tiny steps called pips. On GBPUSD a pip is 0.0001. If you buy at 1.3200 and sell at 1.3230 you made 30 pips. How much money that is depends on your position size: on one standard lot a pip on GBPUSD is worth 10 US dollars, so 30 pips would be 300 dollars. On a micro lot (0.01) it would be 3 dollars.

The same maths works against you. That is why the real skill in trading is not finding winners. It is controlling how much you lose when you are wrong, which is covered in risk management for beginners.

Leverage: the part that catches people out

Brokers let you control a large position with a small deposit. This is leverage. In the UK, the FCA caps leverage for retail clients at 30 to 1 on major pairs, so 1,000 pounds of margin can control a 30,000 pound position. Leverage makes small moves matter, in both directions. Most UK brokers have to publish what share of their retail accounts lose money, and the figure is usually well over half.

When the market is open

Forex runs 24 hours a day from Sunday night to Friday night, passing from Sydney to Tokyo, London and New York. Not every hour is worth trading. Our guide to forex session times in UK time shows when each market is busy.

What actually moves prices

• Interest rates and central banks. The Bank of England and the US Federal Reserve move the pound and dollar more than anything else.
• Economic data. Inflation (CPI), jobs reports and growth figures. Traders call the biggest releases “red folder” news.
• Liquidity. In the short term, price is drawn to where orders are resting, such as just above an obvious high or below an obvious low. That idea is the heart of the Asia range strategy.

How to learn it properly

1. Pick one pair and one time of day. Trying to trade everything is the fastest way to learn nothing.
2. Learn one strategy with written rules, so every trade can be checked against them.
3. Practise on a demo account or with a replay tool, and journal every trade.
4. Backtest the rules over at least 50 to 100 trades before risking real money.
5. Only then go live, small, with a broker authorised by the FCA.

The Order Block is built around exactly that path for one pair (GBPUSD) and one idea (the Asia sweep). The free course walks you through it on real charts.