Forex trading is the exchange of one currency for another at an agreed price. That single sentence covers the largest financial market in the world — and almost everything confusing about it comes from people dressing the sentence up. This sheet takes it apart slowly: what is actually being exchanged, who is doing the exchanging, and what it means when a retail broker like us offers you “forex trading” through a CFD account.
A market with no building
Stock markets have exchanges — a central place, real or electronic, where every order meets. The foreign-exchange market has nothing of the kind. Forex is a decentralised network: banks quote prices to other banks, brokers, and funds directly, and those quotes flow outward through electronic platforms until one of them reaches your screen. There is no opening bell, because there is nothing to open.
What is being exchanged is exactly what the name says: money for money. When a European company pays a US supplier, euros are sold and dollars are bought. When a pension fund buys Japanese shares, its home currency is sold for yen first. Tourists, importers, governments, central banks — every cross-border payment on Earth ends in a currency exchange somewhere. Trading is a thin, fast-moving layer on top of that enormous practical flow.
Because the participants span every time zone, the market runs continuously from Monday morning in Asia-Pacific to Friday evening in New York. Nothing trades at the weekend, and prices can reopen Monday at a different level than they closed — a detail that matters more than beginners expect, and one we return to in the sheet on gaps and fills.
Who trades FX — and where you fit
It helps to picture the market as a pool with the biggest swimmers at the centre. In the middle are the major dealing banks, quoting prices to each other in amounts measured in millions. Around them sit investment funds, corporations hedging their payments, and central banks managing reserves. The deepest liquidity — the ability to trade large amounts without moving the price — lives at that centre.
Retail traders occupy the outer edge. Daily FX turnover runs to several trillion dollars; the retail share of that is a single-digit percentage. This is worth knowing for two reasons. First, it is humbling in a useful way: nothing you do will move the EUR/USD price, and no broker's “exclusive insight” changes that. Second, it is reassuring in a useful way: in the major pairs, the market is so deep that an ordinary retail order is filled in a fraction of a second at a price very close to the one on screen.
| Participant | Why they trade FX | Scale |
|---|---|---|
| Dealing banks | Quote prices to everyone else; manage the flow between them | The centre — the bulk of turnover |
| Funds and asset managers | Move money across borders; position around rates and growth | Large |
| Corporations | Pay suppliers and staff abroad; hedge future payments | Steady, practical flow |
| Central banks | Manage reserves; occasionally steer their own currency | Rare but heavy |
| Retail traders | Speculate on price moves through brokers | A single-digit percentage |
The honest framing, then: you are not competing with banks at their own game. You are a small participant buying and selling at prices the big participants set. Your edge, if you ever build one, will come from discipline and risk control — not from out-muscling the centre of the pool.
Pairs, not prices
A share has a price on its own. A currency cannot — a euro is only worth something measured in another currency. That is why every FX price is a pair: EUR/USD, GBP/JPY, USD/CHF. The first currency in the pair is the base currency, the thing being priced; the second is the quote currency, the money used to price it. EUR/USD at 1.0850 is one complete sentence: one euro costs 1.0850 US dollars.
The consequence is that every trade has two sides by construction. Buy EUR/USD and you are simultaneously long euros and short dollars; sell it and the positions reverse. There is no neutral “just holding cash” inside a trade — you are always backing one currency against another. When traders say the dollar is strong, they mean it is strong against something, and which something matters.
A handful of pairs — EUR/USD, USD/JPY, GBP/USD, and a few others, all involving the US dollar — carry most of the world's volume. These majors have the tightest costs and the deepest liquidity, which is why nearly every example in this survey uses one of them, and why the next sheet takes the pair apart in full.
What “trading forex” means at a CFD broker
Here is the part most introductions skip. When you trade forex at a retail broker, you almost never exchange actual currencies. You trade a contract for difference — a CFD — whose value tracks the pair's price. Open a position at one price, close it at another, and the difference is settled in your account currency. No euros arrive anywhere; the contract simply pays out, or charges you, the price move.
Numbers make it concrete, and we use the same anchor across this whole survey: on EUR/USD, one standard lot moves about $10 for every pip the price moves. Buy one lot at 1.0850 and the price rises 40 pips to 1.0890 — you are up roughly $400. The same position falling 40 pips to 1.0810 puts you down the same $400. The mechanism is perfectly symmetrical, and any sheet that shows you only the first half of that example is selling, not teaching.
What a CFD account does not give you is ownership. There is no interest-bearing foreign bank balance, no currency to withdraw and spend. It also adds machinery that real currency exchange does not have — leverage, margin, overnight financing — each of which has its own sheet in this survey, because each one changes your risk in ways that deserve more than a footnote.
Two of those mechanics are worth naming now, even before their own sheets. Leverage lets you control that $400-per-40-pips position with a deposit far smaller than the position itself — which is exactly why the risk warning above mentions losing money rapidly. And every trade starts with a small built-in cost, the spread, paid the moment you enter. Neither mechanic is hidden, but both are easy to ignore while an advert is showing you the winning half of an example.
The honest baseline
Every regulated CFD broker in Europe must publish the percentage of its retail accounts that lose money. Read a few of those disclosures and you will find numbers roughly between 70% and 80%, broker after broker, year after year. That is the baseline reality of this activity, printed in small text under the adverts that surround it.
Why do most retail accounts lose? The short version, expanded in its own report later in the survey: costs are charged on every trade, leverage magnifies mistakes faster than beginners expect, and untrained decision-making under pressure does the rest. None of those causes is a mystery, and none is fixed by enthusiasm. They are fixed — partially, never completely — by understanding the machine, sizing positions so that being wrong is survivable, and practising before paying.
That is why this education exists and why it starts here, rather than with chart patterns or success stories. Trading is a skill with high failure rates and real costs, and the people selling it have an interest in your optimism. Treat anyone who frames it differently — including any page of ours — as a claim to verify, not a promise to trust. The whole survey is built to make that checking possible.
Where to go next
This sheet is the first station on the Zero to First Trade route. From here the route moves through the vocabulary you need — currency pairs, quotes and spreads, pips, lots — and then into the machinery: CFDs, leverage, costs, and order types. It ends with a complete walkthrough of one well-formed practice trade. Walk it in order; each sheet assumes the previous ones.
- Next on the route: currency pairs — base, quote, and why the order matters.
- Then the quote panel itself: bid, ask, and the spread you pay on entry.
- Then the units: pips, lots, and how to translate a price move into money.
None of it requires an account, a deposit, or your phone number. When the route does ask you to do something, it asks you to do it on a demo — where the prices are real and the money is not.
Real market prices, practice balance — rehearse the mechanics before any money is at risk.
The full document behind the percentage — what can be lost, and how.