What Is Forex Trading?
Forex trading is the exchange of one currency for another, always quoted in pairs such as EUR/USD or GBP/JPY. The first currency is the base and the second is the quote; the price tells you how much of the quote currency is needed to buy one unit of the base.
Traders profit from changes in the exchange rate, going long when they expect the base currency to strengthen and short when they expect it to weaken. Leverage is common in forex, which magnifies both gains and losses and makes risk management non-negotiable.
Major, Minor and Exotic Pairs
The majors — EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD and NZD/USD — all involve the US dollar and offer the tightest spreads and deepest liquidity. Minor pairs (or crosses) exclude the dollar, while exotics pair a major currency with an emerging-market currency and carry wider spreads.
- Majors: highest liquidity, tightest spreads — ideal for beginners
- Minors/crosses: EUR/GBP, EUR/JPY and similar dollar-free pairs
- Exotics: higher volatility and cost, best left to experienced traders
Trading the Sessions
The forex day rotates through the Sydney, Tokyo, London and New York sessions. The Asian session is typically quiet and range-bound, the London session brings the biggest expansion, and the New York session delivers the deepest liquidity — especially during the London–New York overlap.
Currency-specific data and central-bank decisions can reprice a pair in seconds, so always align your trading with the economic calendar and the latest market news.
New to the currency market?
Start with our structured lessons and build a foundation before you trade live.