Forex beginners must know these before entering the real market

The foreign exchange market is attracting new investors to experience the thrill of profit from currency movements. With an average daily trading volume worldwide of approximately 7.5 trillion dollars, this market is no longer just for big institutions.

What is Forex Really?

Forex trading mainly involves buying and selling currency pairs (Currency Pairs). It assesses whether one currency will strengthen or weaken against another, such as USD/THB at 35.00, meaning you need 35 Baht to buy 1 US dollar.

What makes beginners often lack understanding is that forex does not only mean cash. Due to enormous liquidity, people can now trade through various channels, from spot (Spot Trading) to CFDs, which are contracts for difference (Contracts for Difference) that give rights to profit from price movements.

Why Does This Market Attract So Many Traders?

High liquidity allows you to enter and exit positions smoothly. There are always buyers for your desired selling price, so you don’t have to worry about high spreads.

Almost 24-hour trading sessions give busy traders or those who prefer trading at their own pace the opportunity to trade conveniently.

Using leverage (Leverage) is also attractive to beginners with limited capital, but it comes with sharp risks—profits can be made quickly, but losses can also be rapid.

Additionally, there are many currency pairs to choose from, enabling profits in both bullish and bearish markets, as long as you read the market correctly.

What Factors Cause Currency Values to Change?

Central bank policies (Interest Rate Decisions) cause the fastest and most intense currency fluctuations, especially when major central banks release new policy information.

Economic data such as inflation figures, employment reports, or even GDP estimates are closely watched by traders and influence future policy expectations.

International investment flows, driven by industry changes, global trade policies, or elections, also impact related currencies.

General market conditions, such as oil prices, gold prices, or stock market trends, can support or suppress currency values.

During economic crises or tense situations, safe-haven currencies like the Japanese Yen, US Dollar, or Swiss Franc become preferred by investors.

How to Choose How to Trade Forex Before Starting

Choosing the right currency pairs depends largely on liquidity. First, EUR/USD is the king of liquidity, with narrow spreads, suitable for short- and medium-term trading, and most active when European and US markets are open.

USD/JPY is another popular choice, with good liquidity and moderate volatility, but can become highly volatile when the Bank of Japan announces new policies.

GBP/USD appeals to those who like excitement, with good liquidity but high volatility, suitable for traders with high risk appetite.

Different Styles of Forex Investment

Spot Trading (Spot Trading) involves straightforward buying and selling of real currencies. Full payment is required, with no spreads or fees. Usually, the amounts are high, making it unsuitable for retail traders.

Futures (Futures) are highly standardized contracts traded on official markets like TFEX in Thailand or CME in the US. They offer excellent liquidity, leverage, but contract sizes are large, suitable for those with decent capital.

CFDs (Contracts for Difference) are the most flexible option, ideal for beginners who don’t want to invest large amounts but want short-term trading. They allow high leverage but carry high risk, and positions can be easily forced to close.

5 Steps to Start Trading Forex Properly

Step 1: Choose Your Market Decide on currency pairs that match your readiness. Remember, high liquidity, appropriate volatility, and suitable trading hours are key principles.

Step 2: Place Orders After technical analysis and when ready, issue buy or sell orders based on your signals.

Step 3: Set Protective Conditions Use Stop Loss to automatically close positions when losses reach your limit, and Take Profit to lock in gains. Set Limit Orders to wait for better opportunities.

Step 4: Monitor Margin Level Keep an eye on your margin level (Margin Level), and close positions when profits are realized or accept losses according to your plan.

Step 5: Review Systematically After each trade, analyze what went wrong or right, to learn and improve. This is costly training.

Important Cautions - Read Everything Before Truly Starting

Excessively High Leverage is a double-edged sword. It can accelerate profits but also losses. Traders unfamiliar with market volatility may be forced to close positions just before the market turns around.

Price Volatility During Major News events, such as central bank meetings or economic data releases, can cause sudden and sharp price swings. Without proper risk management, you may suffer unexpected losses.

Overtrading is a common mistake among beginners who tend to trade too frequently, increasing fees and the chance of losses. Follow your plan and avoid impulsive overtrading.

Summary

Forex trading is not a mysterious science, but it’s also not easy. The key is preparation, understanding the market, risk management, and learning from trial and error. Careful and disciplined new traders have opportunities to profit through flexible CFDs or other styles that suit them. Good luck, and remember: “Doing what works repeatedly is the formula for life.”