What is forex? A plain-language start

Forex is the market where the world's currencies are traded against each other. It is the largest financial market on the planet, open 24 hours a day, five days a week. Here is what a beginner actually needs to understand.

What you are really trading

Currencies are always quoted in pairs, like EUR/USD or USD/JPY. When you trade a pair, you are buying one currency and selling the other at the same time. If you buy EUR/USD, you profit when the euro strengthens against the dollar — and lose when it weakens.

The first currency is the base; the second is the quote. The price tells you how much of the quote currency you need to buy one unit of the base.

Pips: how movement is measured

Price moves are measured in pips — usually the fourth decimal place (0.0001). If EUR/USD moves from 1.1000 to 1.1001, that is one pip. For yen pairs, a pip is the second decimal (0.01). Our pip calculator turns pips into real money.

Lots: how size is measured

You trade in lots. A standard lot is 100,000 units of the base currency; a mini lot is 10,000; a micro lot is 1,000. Bigger lots mean each pip is worth more — and your gains and losses grow with it.

How money is made — and lost

Profit and loss = pips moved × pip value. A 50-pip win on a position where each pip is worth $2 is a $100 gain. The same move against you is a $100 loss. This symmetry is the whole game: the market does not care which way you guessed.

The honest statistic: most retail traders lose money. Not because the market is rigged, but because they skip the boring parts — sizing, stops, and patience.

The major pairs

Beginners should stick to the majors — EUR/USD, GBP/USD, USD/JPY, USD/CHF, and a few others. They are the most liquid, have the tightest spreads, and behave more predictably than exotic pairs.