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32 lessons

Forex for Beginners

For people about to start forex, or who have just started: what is worth knowing, in order. Each lesson takes about 5 to 10 minutes to read, and each one lists research or official sources. It does not tell you which currency to buy, when to enter, or where the market is going.

How to use this course

Reading from the top is best, but skip any lesson you already know. Look up unfamiliar words in the glossary.

Part 1First steps

What happens in forex: the size of the market, and how to read the trading screen and candlesticks (5 lessons)

  1. Lesson 1What is forex? Reading a currency pair, and how buying and selling workForex as changing money, how a trade works, how to read a currency pair, why buying and selling give opposite results, and the two prices, in five diagrams.Think of changing money. Change 800 British pounds into 1,000 US dollars at 0.80 pounds per dollar. When the dollar is 0.81 pounds, changing back gives 810 pounds, a difference of +10 pounds. At 0.79 pounds it would be 790 pounds, or −10 pounds.

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  2. Lesson 2Forex vs other investments: stocks, crypto, binary options and index investingForex, stocks, crypto, binary options and long-term index investing compared side by side: how they work, leverage, costs, maximum loss and rules.How it works. Buying shares, index funds, ETFs or crypto with your own money: at most what you paid. Binary options: up to the premium per trade, but repeated trades add up. Shares bought with borrowed money, forex, and crypto margin or futures: can be more than you paid. Most EU countries, the UK and Australia limit retail CFD losses to the funds in the account.

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  3. Lesson 3How big is the forex market? About $9.6 trillion a dayForex trading reached $9.6 trillion a day, and the US dollar is in 89% of trades. The BIS survey, with a chart.BIS survey. By instrument: FX swaps 42%, spot 31%, outright forwards 19%. By currency: US dollar 89.2%, euro 28.9%, yen 16.8%, sterling 10.2% (each trade has two currencies, so currency shares add up to 200%).

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  4. Lesson 4How to read a trading app screen: what is where, using MT5 as the exampleThe four main areas of the screen, Bid and Ask, the order window, reading balance, equity and margin level, and the phone app's screens, using MT5, in five diagrams.A diagram of MT5 for desktop. Top left: Market Watch (a list of prices). Bottom left: Navigator (switching accounts and more). Right: the chart. Bottom: Toolbox (positions, account numbers, history).

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  5. Lesson 5How to read candlesticks, and do patterns work?The four prices one candle shows, plus engulfing, harami and doji. And what forex studies of these shapes found.A rising candle and a falling candle. On a rising candle the open is at the bottom and the close at the top; on a falling candle the open is at the top and the close at the bottom. The line tips are the high and low.

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Part 2Protecting yourself

Before you open an account: how to check a broker, and watching out for social media pitches and unregistered firms (3 lessons)

  1. Lesson 6How to check if a forex broker is regulated before you depositBefore you deposit, check three things: the register, the warning lists, and the contact details. Official links by country and region, and how to use I-SCAN.A diagram of three checks before you deposit. 1 Is it on the register? Search your regulator's register for the name and number, and check what it is allowed to do. 2 Is it on a warning list? Search your regulator's warnings and IOSCO I-SCAN; not being listed does not mean it is safe. 3 Do the contact details match? Compare the website, email and phone with the register, and watch for look-alike names. If anything does not match, do not deposit; ask your regulator first.

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  2. Lesson 7Be careful with social media "pro traders"Some people recommending broker sign-ups are paid by the broker. How it works, plus what regulators and research say, with sources.A study that sorted people posting stock investment ideas on social media by how their picks did: picks did well 28%, no clear effect 16%, picks went the opposite way 56%.
  3. Lesson 8Trading forex with a broker not registered where you liveProtections, complaint routes and rules can change. What regulators say, and how to check a firm.

Part 3Counting prices and profit

Lots, pips and the spread: counting profit and loss in numbers (3 lessons)

  1. Lesson 9What is a lot in forex? How many units one lot isHow many units one lot is depends on your broker and account. How to check it in MT5, and how lots, units and pip value connect, in two diagrams.How to check the size of one lot in MT5. 1 Right-click a symbol in Market Watch. 2 Choose Specification. 3 Find the Contract size line. 100000 in the picture is an example.
  2. Lesson 10How to calculate forex profit and lossP&L is "price difference × contract size × lots". Pips vs points, with a chart and worked examples.EUR/USD bought at 1.0850 and closed at 1.0900. The price difference 0.0050, times a contract size of 100,000, times 0.1 lots, gives 50 USD.
  3. Lesson 11What is the spread? Bid, ask, and when it widensThe spread is the gap between the bid (sell price) and the ask (buy price). How it relates to the chart, and when it widens.Two lines, the bid (sell price) and the ask (buy price), with the spread between them. The gap widens only around a release.

Part 4Margin and leverage

Margin, leverage and stop-outs: how losses affect the money you deposited (7 lessons)

  1. Lesson 12What is leverage in forex? How many times your margin your trade isThe margin formula, maximum vs effective leverage, and how much of your equity a 1% move is, with three worked examples and two diagrams.Worked example. A US dollar account with 1,000 dollars equity holds 10,000 pounds of GBP/USD at 1.2500 (12,500 dollars). With a 1:25 (25x) maximum the required margin is 500 dollars; with a 1:100 (100x) maximum it is 125 dollars. Effective leverage is 12.5x either way, and a 1% move is plus or minus 125 dollars (12.5% of equity). For the same position the profit or loss is the same; what changes is the required margin and the room before a stop out.
  2. Lesson 13Margin, equity, free margin and margin level explainedWhat the five numbers on your trade tab mean, and which ones move when a trade goes against you, with a chart.An account with a 10,000 balance, just after opening a trade that needs 2,000 margin, and after a 500 floating loss. Equity goes from 10,000 to 9,500, free margin from 8,000 to 7,500, and margin level from 500% to 475%.
  3. Lesson 14Unrealized profit and loss: the result of trades you have not closedFloating profit and loss is not final until you close. Where MT4/MT5 show it, how it moves equity and margin level, and two worked examples, in two diagrams.An illustrative example. When the trade is opened in a 1,000 US dollar account, balance and equity are both 1,000 dollars. While it is open with a floating loss of 100 dollars, the balance stays at 1,000 dollars and equity is 900 dollars. After closing, the 100 dollar loss is final and the balance is also 900 dollars.
  4. Lesson 15What is a stop out? Forced closing, and losses larger than your depositHow margin level falls as losses grow, how rules differ by region, when price jumps past the level, and how negative balances are handled, in three diagrams.An example with 100,000 deposited and 40,000 required margin. With no open loss, 100,000 is left and margin level is 250%. With a 60,000 open loss, 40,000 is left: 100%, and a warning comes. With an 80,000 open loss, 20,000 is left: 50%, and positions are closed automatically.
  5. Lesson 16Margin call vs stop out: a warning, then automatic closingA margin call is a warning; a stop out is automatic closing. The two levels, the order they come in, and how rules differ, in two diagrams.An illustrative example. Margin level falls; below the margin call level (e.g. 100%) the account is in the margin call state, and below the stop out level (e.g. 50%) positions are closed automatically.
  6. Lesson 17Forex leverage limits by country and regionMaximum leverage for retail accounts, checked against official regulator sources.
  7. Lesson 18What is swap (rollover)? Receiving or paying the interest rate gapHow the interest rate gap is received or paid, why buying and selling are reversed, how the amount changes and can turn into a payment, and looking at it with price moves, in four diagrams.An example where currency A pays 5% and currency B 1%. Holding A/B as a buy, you receive A's 5% and pay B's 1%, so you receive the 4% gap. Holding it as a sell, you pay A's 5% and receive B's 1%, so you pay the 4% gap.

Part 5Orders

How orders work, when prices can slip or gap, and market holidays (6 lessons)

  1. Lesson 19Forex order types: from market orders to OCO and If DoneFrom market, limit and stop orders to OCO, If Done and trailing stops. All the order types on one chart.Order types at a glance. In the MT5 help order list: market, limit, stop, stop limit, orders with stop loss and take profit attached, trailing stop, and expiration and fill policy. Not in the MT5 help list (found in some broker apps): OCO, IFD (If Done) and IFO.
  2. Lesson 20Limit vs stop ordersA limit waits for a better price; a stop waits for a worse one. Where the four pending orders go, with a chart.Above the current price: Sell Limit and Buy Stop. Below the current price: Buy Limit and Sell Stop.
  3. Lesson 21What is slippage? The gap between your order price and your fillSlippage is the difference between the price you ordered at and the price you got. It can go either way. With charts on order types.A buy example. The price shown when buying EUR/USD at market was 1.08500. A fill at 1.08503 is 0.3 pips of slippage against you; a fill at 1.08497 is 0.3 pips in your favor. On 10,000 units, either one is a 0.30 US dollar difference. For a sell, better and worse are reversed.
  4. Lesson 22Price gaps: why a stop-loss may not fill at your priceIf price jumps while the market is closed, your stop can fill at a worse price than you set. With a chart.A buy position with a stop at 1.0950. The last price before the market closed was 1.0975, and the first price when it reopened was 1.0900, past the stop. The stop fills at a worse price than set.
  5. Lesson 23Forex market holidays, year-end and holding over the weekendAlmost 24 hours on weekdays, closed at the weekend. What can happen over weekends, holidays and year-end, and how to check your trading hours.An illustrative example. On weekdays, price keeps moving almost 24 hours a day. At the weekend, trading stops and price does not move. When the new week opens, price can start away from the last price of the previous week; that difference is called a gap. Closing and opening times differ by broker, and holidays and the year-end period can shorten trading hours.
  6. Lesson 24What is hedging in forex? Netting vs hedging accountsHedging is holding a buy and a sell on the same pair at once. How account types differ, and why price moves cancel but costs remain.An example: buy 0.1 lot of EUR/USD, then sell 0.1 lot of the same pair. In a netting account, one position per symbol, so the sell closes the buy and no position is left. In a hedging account, several positions per symbol, so the 0.1 buy and the 0.1 sell both stay open.

Part 6Decide your loss before you enter

Setting how much you can lose, in numbers, before you enter (4 lessons)

  1. Lesson 25Risk-reward ratio and break-even win rateNeither win rate nor risk-reward alone decides your result. The math of looking at both together, with a chart.Bar chart: with a risk-reward ratio (average win ÷ average loss) of 0.5, 1, 1.5, 2 and 3, the win rate that breaks even is 66.7%, 50%, 40%, 33.3% and 25%.
  2. Lesson 26Count your trading costs for a monthAdd up a month of spread, commission and swap, and compare it with your balance. How to count, with an example.
  3. Lesson 27How to set a daily loss limit for your own accountDecide your daily loss limit in money from three starting points, then check it with numbers.
  4. Lesson 28Losing streaks, in numbersAt a 50% win rate, 5+ losses in a row at least once within 100 trades has about an 81% chance of happening. Treat streaks as something that will happen.In 100 trades, the chance of at least one losing streak of 5, 7 or 10 or more. At a 40% win rate: 97.6%, 68.9%, 20.5%. At 50%: 81.0%, 31.8%, 4.4%.

Part 7Keeping records and reviewing

Keeping records, and when feelings move your decisions (4 lessons)

  1. Lesson 29What to write in a trading journalNot just profit and loss: feelings, rules and trade count in one table. A one-line format and a weekly review.
  2. Lesson 30How to review a month of tradingOnce a month, write down five numbers and choose just one thing to change next month.
  3. Lesson 31How to stop revenge tradingFive rules to set in advance, for the moment you want to win it back right away.Bar chart: after a 10%, 20%, 30% or 50% drawdown, the gain needed to get back is 11.1%, 25%, 42.9% or 100%.
  4. Lesson 32Loss aversion in tradingLosing 100 often feels worse than winning 100 feels good. What research says, and how it relates to taking profits early. With sources.How a same-size gain and loss feel. With the gain set to 1, the loss feels about 2.25. Median of an experiment with 25 US graduate students; it varies by person and situation.

Free calculators for this course

Position size calculatorLot size from your risk and stop lossPip value calculatorWhat one pip is worth, and P&L in pipsProfit and loss calculatorPips and P&L from entry and exit pricesMargin calculatorRequired margin from lot size, price and leverageMargin level & stop-out calculatorYour margin level, and how far you are from stop-outDaily loss limit calculatorDaily, weekly and monthly limits in money, and losses to reach them

This article is general information. It is not investment advice or a recommendation to make any trade.

Updated 22 Oct 2026 · Run by Kenji Okumura, Representative, Tiltnote · About this site