Course 1 Beginner

Forex Foundations

What the forex market is, how prices are quoted, who trades and when. Start here if you have never placed a trade.

0 of 16 lessons

Module 1: Understanding forex

1
What Is Forex?
Forex, short for foreign exchange, is the market where one currency is exchanged for another. It is the largest financial market in the world, turning over...
2
How the Forex Market Works
The forex market works as a layered network. At the top, the largest banks trade with each other in the interbank market and set the prices everyone else sees....
3
Why Currencies Change Value
Currencies change value because the demand for them changes. Anything that makes people want to hold more of a currency pushes its price up against others:...
4
Who Trades Forex?
Forex is traded by central banks managing reserves and currency policy, commercial banks dealing for clients and themselves, funds and asset managers moving...
5
Why People Trade Currencies
People trade currencies for three reasons: to pay for something in another country, to protect themselves against a currency move they cannot avoid, or to...
6
Spot Forex and Forex CFDs
Retail traders usually trade forex in one of two forms. Spot forex is an agreement to exchange currencies at the current price, settled two days later, which...

7
Base Currency and Quote Currency
In any currency pair the first currency is the base and the second is the quote. The price tells you how much of the quote currency one unit of the base...
8
The Major Currency Pairs
The majors are the most traded currency pairs in the world, and every one of them includes the US dollar: EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD...
9
Minor Pairs and Crosses
A cross is a currency pair that does not include the US dollar, such as EUR/GBP, EUR/JPY or AUD/NZD. The most traded crosses, between the major currencies, are...
10
Exotic Pairs
An exotic pair pairs a major currency with the currency of a smaller or emerging economy: USD/TRY, USD/ZAR, USD/MXN, EUR/PLN, USD/SEK and the like. They trade...

11
Bid, Ask and Spread
Every forex price is actually two prices. The bid is what the broker will pay you for the base currency, so it is the price you sell at. The ask, or offer, is...
12
What Is a Pip?
A pip is the standard unit of price movement in forex. For most pairs it is the fourth decimal place, so a move from 1.1000 to 1.1001 is one pip. For pairs...
13
Pipettes and Price Movement
A pipette is a tenth of a pip, shown as a fifth decimal place on most pairs and a third on yen pairs. Brokers added it so they could quote spreads more finely...

14
Market Participants and Liquidity
Liquidity is the ease with which you can buy or sell at the current price, and it is created by the participants described earlier in this course: banks,...
15
Forex Market Hours
The forex market is open continuously from Sunday evening to Friday evening in New York time, divided into four sessions named for the financial centres that...
16
Session Overlaps and the Trading Week
Session overlaps are the hours when two financial centres are trading at once, and the London and New York overlap, roughly 13:00 to 17:00 UTC, is the most...

Every lesson's knowledge check plus a few extra questions, scored with feedback. Then continue to Course 2: Forex Brokers.