Lesson 1 of 69
What is Forex? What is trading?
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Trading is the act of buying something with the expectation of selling it later at a higher price — or selling it first and buying it back cheaper. That is the entire business, whether the thing you trade is a currency, a barrel of oil, a share, or a bitcoin.
Forex (short for foreign exchange, also written FX) is the market where the world's currencies are exchanged. Every time a company pays a foreign supplier, a tourist buys euros, or a fund hedges a bond position, a currency trade happens. Roughly $7.5 trillion changes hands every single day, which makes it the largest financial market on earth.
Currencies always trade in pairs
You never buy a currency in isolation — you always buy one and sell another at the same time. That is why prices are quoted as pairs like EUR/USD. The first currency is the base, the second is the quote.
Reading a quote
EUR/USD = 1.0850 means one euro costs 1.0850 US dollars. If you buy EUR/USD and the price moves to 1.0900, the euro strengthened and your trade is in profit. If it drops to 1.0800, the dollar strengthened and you are down.
Going long and going short
- Long (buy): you expect the base currency to rise against the quote currency.
- Short (sell): you expect the base currency to fall. In forex, shorting is as normal and as easy as buying.
- Your profit or loss is the difference between your entry and exit price, multiplied by your .
What actually moves a price?
Price is simply the point where buyers and sellers currently agree. When more money wants to buy than sell, the price rises. Interest rates, inflation data, central bank statements, growth figures and geopolitics all change how much money wants to be on each side.
The one rule to remember
Trading is not about being right most of the time. It is about making more on your winners than you lose on your losers. Risk control comes before strategy.
Key takeaways
- Trading means buying something to sell it higher, or selling first and buying it back cheaper.
- Forex is the market where currencies are exchanged — roughly $7.5 trillion changes hands daily.
- Currencies are always quoted in pairs: the first is the base, the second is the quote.
- You can go long (buy) or short (sell) just as easily in forex.
Knowledge check
3 quick questions — your best score is saved to your progress.
1. In the quote EUR/USD = 1.0850, what does the 1.0850 tell you?
2. What does 'going short' mean?
3. Roughly how much is traded on the forex market each day?
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