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Frequently Asked Questions

New to forex trading? Confused by terms like "pips," "leverage," or "spread"? You’re not alone. We know that successful trading starts with understanding the basics. That is why we have created a clear, accessible guide to the most commonly asked questions in forex designed to help you build confidence and trade smarter from day one.

Forex trading is the act of buying and selling currencies with the aim of making a profit.

It operates as a decentralized global market where currencies are traded in pairs 24 hours a day, five days a week.

A currency pair shows how much of one currency is needed to buy one unit of another. Example: EUR/USD,GBPUSD.

  • Major: Includes USD and other major economies (e.g., EUR/USD)
  • Minor: Does not include USD (e.g., EUR/GBP).
  • Exotic: Involves a major and a developing economy currency (e.g., USD/TRY).

A pip (percentage in point) is the smallest price move in a currency pair, usually 0.0001.

Leverage allows traders to control larger positions with smaller amounts of capital. It increases both profit and risk.

A lot is the volume of a trade. Standard = 100,000 units; Mini = 10,000; Micro = 1,000.

Mainly through spreads (the difference between buy/sell prices) and commissions.

The spread is the difference between the bid (sell) and ask (buy) price.

Margin is the amount of money required to open a leveraged position.

Analyzing price charts and patterns to forecast future price movements

Moving Averages, RSI, MACD, Bollinger Bands, and Fibonacci Retracement

They smooth out price data to identify trends over time.

Support is a price level where demand prevents decline; resistance is where selling prevents rise.

A strategy that involves identifying and trading in the direction of the market trend.

A visual representation of price movement within a time frame, used to predict price direction.

Analyzing economic, political, and social factors affecting currency values.

They influence expectations about a country’s economic health and its currency’s strength.

A schedule of important economic releases (e.g., GDP, CPI, interest rate decisions).

Interest rate decisions, inflation data, employment reports, GDP, and geopolitical events.

Buying and selling currencies within the same trading day.

Holding positions for several days to capture medium-term market moves

Making many small trades throughout the day to take advantage of tiny price changes.

Long-term trading based on macroeconomic trends and fundamental analysis.

Combine technical/fundamental analysis, risk management, and backtesting.

It compares the potential loss to the potential gain of a trade.

Stop Loss: Closes trade at a set loss. Take Profit: Closes at a set gain.

Use stop loss, limit leverage, and risk a small percentage per trade (e.g., 1-2%).

Testing a strategy on historical data to see how it would have performed.

Yes, using Expert Advisors (EAs) or trading bots.

A practice account using virtual money to trade without risk.

Popular ones include MetaTrader 4 (MT4), MetaTrader 5 (MT5), and cTrader.

Check regulation, trading fees, platform features, and customer support.

Standard, mini, micro, ECN, Islamic, and demo accounts.

Based on lot size: micro (1,000), mini (10,000), standard (100,000 units).Standard, mini, micro, ECN, Islamic, and demo accounts.

Via bank transfer, credit/debit card, or ewallets.

The Forex market is open 24 hours a day, Monday to Friday

Yes, but it requires skill, discipline, and sufficient capital.

You can start with as little as $50, but $500–$1,000 is more practical.

Leverage can amplify losses. Market volatility and poor risk management also pose risks.

Lack of discipline, poor risk management, overtrading, and emotional decisions.

Depends on skill and risk tolerance. Many aim for 3–10% monthly returns.

The reduction in account equity from peak to trough before a new peak is achieved.

Follow a tested strategy, manage risk, and continuously learn.

Check your country’s regulations. Many countries allow regulated forex trading.

Trade with regulated brokers and beware of get-rich-quick schemes.

Brokers overseen by financial authorities like the FCA, CFTC, or ASIC.

Only with a regulated broker that uses segregated accounts and offers investor protection

Learn the basics, open a demo account, study strategies, and practice.

Books, online courses, YouTube tutorials, and demo trading platforms.

Slippage is the difference between the expected price of a trade and the price at which it is executed.

Liquidity refers to how easily a currency pair can be bought or sold without affecting its price.

A strategy where traders borrow in a low-interest currency to invest in a high-interest currency.

Higher interest rates attract foreign capital and may increase demand for a currency.

Hedging involves opening opposite positions to reduce potential losses.

A swap is the interest paid or earned for holding a position overnight.

A record of trades that helps track performance and improve strategies.

Excessive trading, usually driven by emotion or lack of discipline.

Yes, through automated strategies or copy trading, but it still requires monitoring.

A method where you automatically copy the trades of experienced traders.

A platform where traders share strategies and performance, allowing others to follow them.

Yes, but it limits your potential returns and your risk.

A Virtual Private Server lets you run your trading platform 24/7, ideal for EAs.

Trade ideas or alerts provided by other traders or services.

Paid signals may offer better quality, but always verify their track record.

Trading based on market reactions to economic news releases.

A strategy based on reading and interpreting raw price movement without indicators.

A strong price movement outside a defined support/resistance level or range.

Buying at support and selling at resistance in sideways markets.

Using computer programs to execute trades based on predefined criteria.

A form of algorithmic trading involving rapid execution of many orders in seconds.

A broker that connects traders directly to liquidity providers without dealing desk intervention.

A broker’s desk that can take the opposite side of your trade.

Yes, most brokers offer mobile platforms like MT4/MT5 for trading on the go.

A dynamic stop-loss that moves in your favor to lock in profits.

Pip value = (Pip in decimal * Trade size) / Exchange rate.

A cashback program where you earn money back based on trading volume.

Yes, but tax laws vary by country. Consult a local tax advisor.

During overlapping sessions like London/New York for high volatility..

The overall attitude of traders toward a particular currency or market condition.

When price breaks a level but quickly reverses, trapping breakout traders.

Yes, unless using a broker with negative balance protection.

Determining how much to trade based on account size and risk tolerance.

Automated trading software that executes trades based on programmed rules.

Doubling position size after each loss to recover losses with one win.

MT5 has more features like more timeframes and asset types, but MT4 remains popular for forex.

Pairs created by combining two other currency pairs to replicate exposure.

Use platforms like Forex Factory, Investing.com, and economic calendars.

Profiting from price differences of the same asset on different platforms.

A derivative strategy where traders speculate on price movement without owning the asset.

Contracts for Difference allow you to trade price movements without owning the currency.

Low leverage (1:10 or 1:20) is safest while learning.

An institution that offers buy/sell quotes to brokers and traders.

Yes, many traders successfully trade around their schedules.

The top tier forex market where banks trade currencies directly.

A person or service that offers trade ideas with entry/exit points.

Pairs involving a major currency and a developing economy currency.

Accept losses as part of the game, use risk control, and review your strategy.

Not necessarily. It requires discipline, risk tolerance, and continuous learning.

Trading foreign exchange (forex) or any other financial instrument on margin carries a high level of risk and may not be suitable for all investors. The leverage in online trading can work both for and against you. Before deciding to trade forex or any other financial instrument online, you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment. Do not trade with money you cannot afford to lose. By using our website, services, market analysis, or automated trading tools, you acknowledge that you have read, understood, and fully appreciate the risk/s involved.

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