Currencies always trade in pairs
Every forex quote expresses the value of one currency against another. In EUR/USD, the euro is the base currency and the US dollar is the quote currency. A price of 1.0840 means one euro is worth 1.0840 US dollars.
Buying a pair means buying the base currency and simultaneously selling the quote currency. There is no separate 'short selling' mechanism to learn — direction is simply which side of the pair you take.
Majors, minors and exotics
Major pairs include the US dollar and one other large economy's currency. Minor pairs exclude the dollar, and exotic pairs combine a major currency with a smaller or less liquid economy. Liquidity generally falls, and spreads generally widen, as you move down that list.
The bid, the ask and the spread
Brokers publish two prices: the bid, at which you can sell, and the ask, at which you can buy. The gap between them is the spread, and it is the most visible cost in most retail forex accounts.
Spreads widen around major economic releases and during thin liquidity hours. Comparing typical spreads during your own trading session is more useful than comparing advertised minimums.
Leverage magnifies both directions
Leverage lets a trader control a position larger than the account balance. It increases the size of gains and losses in equal measure, which is why position sizing matters more than entry precision for most beginners.
Margin is the portion of your balance reserved to hold a position open. If account equity falls below the required margin, positions may be closed automatically.
Orders and how positions close
Market orders execute at the best available price, while limit and stop orders execute only when the market reaches a level you define. A stop-loss order defines the point at which you accept the trade idea was wrong.
Retail forex positions are typically rolled over rather than physically settled, which introduces a small overnight financing adjustment on positions held past the daily rollover time.
Leverage does not change the probability of a trade working — it only changes how much a given move is worth to your account.
Trading leveraged products carries significant risk. This content is educational and is not financial advice.
Frequently asked questions
Do I need a large account to start?
Account minimums vary widely between providers. What matters more is sizing positions so that a single loss represents a small percentage of the account.
Is forex open 24 hours?
The market runs continuously from the Asian session opening through to the New York close on Friday, but liquidity is not evenly distributed across those hours.
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