19 Dec, 2023

Introduction to Forex Trading: An Ultimate Guide for Beginners

An introductory guide for Forex traders: How to start trading currency pairs
An introductory guide for Forex traders: How to start trading currency pairs

Forex trading is one of the most attractive types of making money in the financial markets, as it allows you to buy and sell the most liquid currencies. The idea behind FX trading is to buy a currency cheaper and then sell it when it becomes more expensive, and vice versa. Therefore, your main goal is to complete speculative operations that will allow you to make money on the price difference. If you are looking for more information about Forex trading, aka currency trading, read this introductory guide until the full stop.

What Is Forex Market? 

While Forex is often called a market, this is not the same as the stock market or any other place where traders come to buy shares, commodities, etc. This is a distributed market, which includes all the transactions by central banks, commercial banks, and other participants when they buy one currency in exchange for another. To start trading FX currencies, you can open an account at Binolla now.

The primary goal of the FX market is to provide seamless international commercial activity. For instance, company A from Europe purchases some hardware components from Company B, which is located in Japan. For this contract to be fully executed, the A company is required to buy the Japanese yen in exchange for EUR. In most cases, companies do not go to the interbank market directly. They buy currency at one of the banks (looking at exchange rates and other conditions), and then they transfer the currency to their counterparts abroad.

However, this is not the only way for people to use Forex. The international currency market provides them with a lot of trading opportunities, allowing them to make money from the difference in prices between two currencies. For instance, you can buy EUR against USD if you think that the European currency is going to grow in price over time. If this happens, you then sell EUR and buy the US dollar again to receive profit from such an operation.

All currencies in Forex trading are merged into currency pairs. Instead of buying EUR, you are purchasing EUR/USD or EUR/GBP depending on your trading goals.

To make it even more clear, let’s take another example. Assume that the current EUR/USD price is 1.1000. You think that it is going to hit 1.1100 over time. To make money on this price change, you simply need to buy EUR/USD. If you are right and the currency pair reaches 1.1100, then you will take your profit. 

About Forex Market

One of the reasons Forex trading is so popular among traders is that it boasts massive liquidity as compared to other markets. Here are some figures that will help you understand how interesting FX trading can be for you.

Forex Key ParticipantsBarklays, BNP Paribas, Citi Bank, Deutsche Bank, Goldman Sachs, HCBS Holdings plc, JP Morgan Chase and co, etc.
Market Size in 2022$753,2 Billion
Predicted Market Size by 2028$ 1,143.2 Billion
Expected Growth Rate in the Next Six Years7%
Current Daily Transactions Volume$6.6 Trillion in day-by-day transactions
Forex market general data

Forex Trading: Main Terminology that You Should Know

Before you start Forex trading, it is very important to discover the main terminology so that you can easily understand the difference between bullish and bearish markets, the meaning of spread and how it affects your trades, as well as the key role of Forex trading leverage:

  • Currency pair. This is the basic tool in Forex trading that merges two currencies. When it comes to the FX market, you are not going to buy currencies independently from each other. In contrast, you are going to purchase or sell currency pairs, which look like the following: EUR/USD GBP/USD, AUD/USD, NZD/USD, USD/CHF, EUR/GBP, etc.;
  • CFD, or contract for difference. This is the basic contract in Forex trading, which allows you to buy a currency pair and close the deal later when you think that it is time to. CFD is a very popular form of trading contract as it allows you to purchase a currency pair without obtaining it in the real world;
  • Price pip. This is a base unit in the price of the currency pair. If one says that EUR/USD moved ten pips from 1.1010, for instance, this means that the current price of the currency pair is 1.1020. Keep in mind that depending on the number of figures after the dot, it can vary from four to five;
  • Spread. This is a very important parameter that defines the difference between Bid and Ask prices. Unlike digital options, where there is no spread at all, in Forex trading you are going to buy at the ask price, while when you want to sell a currency pair, the transaction will be done at the bid. This is similar to standard bank exchange transactions when you buy at a price that the bank wants to sell a currency to you (which is higher than the bid price) and sell at the bid price, which is normally lower. Spreads start from 0 pips, but they can reach 3 or even more pips depending on the current situation in the markets and the type of spread you choose;
  • Leverage. This is a kind of credit that you take from Binolla in order to buy more currency in the market and, therefore, increase your eventual profits. However, you should master leverage and understand what risks you going to take before choosing an appropriate one. Keep in mind that leverage can not be withdrawn from your account. It is credited once you open a trade and deducted at the moment you close it;
  • Bearish market. This is a general downtrend on the market when the price goes down. You can define the bearish market using trends, trend-following indicators, and many other technical analysis tools;
  • Bullish market. The opposite of a bearish market is positive and traders use this word to describe the situation of general buyers’ domination;
  • Stop-loss. A special order that allows you to automate the process of closing your deal when the price goes in the opposite direction of your forecasts. Moreover, stop losses protect traders from situations of sharp price movements;
  • Take Profit. Opposite to stop-loss, take profit orders are designed to set levels at which you want to close your position if the price goes along with your forecasts. Binolla platform allows you to use both stop-loss and take profits to automate your risk and money management strategies;
  • Long and short trades. When a trader says that they go long, this means that they buy a currency pair, while by going short, they sell it.

Types of Forex Charts

Another important thing that traders should do after they have learned the main terminology is to choose a trading chart that they are going to use. When it comes to Binolla, the brokerage company offers four main types of charts that you can choose from.

Japanese Candlesticks

One of the most popular charts can be used for both reading price fluctuations and drawing trading conclusions. Japanese candlesticks illustrate four main price parameters, such as open, high, low, and close. With this information, you can not only better understand what is happening on charts but also make your price predictions for various timeframes.

Heikin Ashi

This is an augmented Japanese candlestick chart, which allows you to see price movement directions even without applying additional tools. Heikin ashi considers average prices instead of providing traders with information about pure open, high, low and close, which makes it useful in some strategies but totally useless in others when you need exact prices.


Like Japanese candlesticks, this type of chart provides traders with information about the main four price parameters: open, high, low, and close. It can be used in the very same strategies. Bars look like vertical lines with horizontal dashes on them, but, in general, they are similar to Japanese candlesticks in all that relates to price reading and price action trading system.


The line chart consists of dots that are connected with lines. It reflects each particular price change. While it is very simple to read, it is less informative than Japanese candlesticks, bars, or heikin ashi. Therefore, it is less used by traders in their everyday routine.

How to Trade Forex: A Complete Step-by-Step Guide

Now we have moved closer to the guide, which will provide you with all the steps that you should take in order to place a trade in Forex. Go through the bullets below to see how it works:

  • Open a trading account and deposit funds;
  • Start trading on demo to hone your skills and familiarize yourself with the platform;
  • Switch to real-money account;
  • Choose a currency pair, a type of chart, and a timeframe (the latter is relevant for bars, Japanese candlesticks, and heikin ashi only);
  • Use your strategy to conduct market analysis. You can apply either technical or fundamental analysis or even both;
  • Define your price targets;
  • Set stop-losses and take profit orders;
  • Input the amount you want to invest in a single trade;
  • Buy or sell a currency pair.

Forex Trading: How to Predict Prices

In order to become a successful Forex trader, you need to use various strategies and analysis tools. If you are a beginner trader, some of the basic tactics below may be very useful to you.

Defining Price Movement Direction

One of the key goals of Forex traders is to define a currency pair movement direction, aka trend. Knowing the trend is a very important task, as you can buy a currency pair if you think that it is going to surge or sell it if you assume that the trend is going to decline. 

There are plenty of ways for FX traders to define market trends, and we are going to describe the essential ones below.

Using a Trendline

One of the easiest ways to define a trend in trading is to draw a trendline. This line connects higher lows when it comes to an uptrend and lower highs when the price is going down. 

The example above is very illustrative and shows how building a trend line on a chart can be helpful for traders. We have connected the rising lows, and now we know that a currency pair is in an uptrend. This information may be useful for trading, as you can buy a currency pair each time the price rejects the trend line (except for the first two points, which serve as the basic ones for building a trendline).

Another example that we would like to share with you is a downtrend line that highlights the current downside price movement. Like with the uptrend line, this one allows you to establish the current price trend.

Moving Average in Forex Trading

Defining trends in Forex trading can be done in various ways. You can apply a moving average to do it. 

As you can see on the chart, the moving average indicator does the very same job as the trend line as it highlights the current price movement direction. If the trendline is below the price, then you can assume that it is an uptrend. On the other hand, when the trendline goes above the price, you can expect the price to develop a downtrend. 

Basic Forex Trading Strategies

To start trading and tip the scales, you need to use some strategies. There are plenty of types of various tactics that you can apply, but we are going to provide you with some basic ones.

Japanese Candlestick Analysis

One of the most interesting systems that a lot of professional traders use in their trading routine is Japanese candlestick analysis. It includes more than ten various patterns that you can use in most cases. Here is an example of how to apply one of the most popular patterns in trading.

The image above shows a bullish hammer pattern, which is formed at the bottom of the market. The hammer pattern appears after the downtrend and predicts the market reversal. In our particular example, after the hammer pattern appears, the price goes upwards. This strategy allows you to make money by buying a currency pair.

Rejecting the Trendline Strategy

Another simple strategy involves a trendline and a Japanese candlestick analysis. This explosive combination allows you to enter a trade during the trend. In the example above you can see the price touching the trend line and going upwards. Moreover, there is a bullish engulfing pattern, which gives you another proof for the price to resume the uptrend. 

Momentum Forex Strategies

Momentum indicators are very useful as they allow you to predict price reversals beforehand. Therefore, they can be used in various strategies, including the simplest ones. 

One of the examples of momentum indicators is the RSI or relative strength index. It is used to define the strength of the current price movements and is very useful when it comes to defining price momentum.

In our example, RSI leaves the overbought area, which is a good signal for traders to sell a currency pair.

Forex Trading Styles

Most professional traders use one of the styles in their everyday routine. There are four main types of trading that you can choose from:

  • Intraday scalping. This is one of the fastest ways to make money in Forex. Traders aim at earning a couple of pips per trade. Those strategies require the maximum concentration of efforts and precise strategies. The idea of scalping is to make a lot of small profits in a matter of minutes or even seconds;
  • Intraday trading strategies. Unlike scalping, which aims at profiting from a couple of pips, intraday strategies are designed to catch longer price movements that may occurs within one single trading day (this is where the name “intraday” comes from). Intraday strategies are less riskier than scalping, but they are still affected by smaller timeframes price noise;
  • Mid-term strategies. Those who prefer to hold their positions overnight and even remain in the market for a couple of weeks use mid-term strategies. Along with the previous two styles, mid-term tactics rely on technical analysis. You can also use fundamentals to trade on market news;
  • Long-term strategies. Those using such strategies hold their positions for months and sometimes even years. One of the advantages of long-term tactics is that you can use any type of market analysis and even combine technical and fundamental forecasting methods. However, you should be prepared to invest more in order to have substantial profits from such trades.

Does Forex Trading Suit You?

To determine whether Forex trading suits you or not, you can read the following information:

  • Forex trading allows you to earn money without working as an employee. The main goal of many beginner FX traders is to become professional market participants and earn money for a living. While this is not an easy task to accomplish, if you manage to, you will make Forex your business;
  • Unlimited opportunities. FX traders can reach whatever goals in trading they want as this business is scalable. Everything depends on how much you are ready to put in risk and the knowledge that you have received previously;
  • A lot of assets to choose from. Forex allows you to trade various types of currency pairs. You can choose from EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/CAD, and many more. This allows you to apply various diversification strategies;
  • There are plenty of tools to predict price fluctuations. Over 40 various technical analysis tools are available to traders that they can use to predict price fluctuations. You can create even more strategies;
  • Forex is a volatile market. When trading currency pairs, you can expect large price movements and long trends;
  • Forex is a liquid market. When trading in the Forex market, you can expect fast transactions as high volumes are traded every day;
  • Leverage. Binolla provides traders with leverage, which is an opportunity to make even more money with additional funds from the broker.

Forex Trading: Tips for Beginners

Useful tips for beginner traders on how to improve their Forex trading results
Useful tips for beginner traders on how to improve their Forex trading results

Beginner traders often make a lot of mistakes due to a lack of knowledge. Here are some tips that you can use to improve your chances:

  • Understanding the markets. Before placing your first trade, you should learn more about the assets you are going to trade. In particular, it would be a good idea to know which fundamentals may have an impact on a currency;
  • Use strategies. Trading randomly is similar to gambling. If you want to achieve positive results in trading, you need to build your own strategies;
  • Stick to your trading plan. Even if you have a trading strategy, you need to stick to it, whatever happens;
  • Try demo. Before trading for real money, you can try trading on a demo account. This will allow you to learn more about the Binolla platform and its features, as well as to work on your strategies and even test them in a risk-free mode;
  • Cut your losses and let your profits grow. Professional traders always know when to cut losses. Don’t let them grow in order to avoid situations when your losses exceed pre-set levels. When it comes to profits, let them grow by holding your positions as long as they go along with your forecasts.

Final Words

Forex trading is an opportunity to make money on the difference in prices between the moment you buy an asset and the moment you close your position. It is very popular nowadays, as it allows you to earn money and even become financially independent. 

To become a successful trader, one needs to elaborate a strategy and use one of the analysis methods to be able to forecast price fluctuations. Moreover, you are to learn how to manage your funds and risks in order to consistently make profits from trading.


Learn more about Forex trading and the amount you can start with. Discover whether trading is a good idea and how long it takes to learn Forex
Learn more about Forex trading and the amount you can start with. Discover whether trading is a good idea and how long it takes to learn Forex

Is Forex Trading a Good Idea?

Forex trading may make you rich if you follow the rules and make the most of it. However, you shouldn’t expect fast results, as you will have to make a lot of preparations before you can trade successfully.

What Sum Should I Start with?

It depends solely on you. Every sum that is above the minimum deposit amount is good for trading. Your choice should be made according to your acceptance of the risks. If you can afford to put $1,000 at risk, then this amount will be comfortable to trade with.

Can Forex Be a Career?

Yes, sure. Forex can become a career if you are going to treat trading professionally. However, even if you are doing your first steps in trading, you can combine them with the main job as the FX market is available 24/5.

How Long Does It Take to Learn Forex Trading?

The process of learning is never ending, when it comes to trading. To discover the basics of trading, it will take a couple of weeks. You can use a demo account for a while to test your trading ideas and check your strategies in a risk-free mode.

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