How to Make a Profit in Forex? Basic Forex Trading Guide for Beginners 2025

The foreign exchange market (Forex) is the largest trading market in the world. In 2024, this market recorded an average daily trading volume of up to $7.5 trillion USD. With its ease of access and abundant profit opportunities, Forex trading has become a popular choice among investors worldwide. This article will introduce how to trade Forex appropriately for your capabilities.

What You Need to Know Before Trading Forex

What is Forex?(

Forex trading refers to the buying and selling of foreign currencies, where each currency has a value compared to others, called currency pairs )Currency Pairs(, such as USD/THB or EUR/USD.

When buying a currency pair, you purchase the base currency )Base Currency( and simultaneously sell the quote currency )Quote Currency###. For example, if you buy USD/THB at 35.00, it means you buy 1 US dollar by paying 35 Thai Baht.

Why is Forex popular among traders?###

Forex trading offers several advantages:

• High liquidity: Can trade in desired volumes, reducing missed opportunities
• Almost 24/5 operation: The Forex market operates nearly 24 hours a day, 5 days a week, allowing flexible trading times
• Diverse trading tools: Supports both bullish and bearish trend trading
• Risk hedging: Can be used to hedge against international investments
• Leverage benefits: Enhances capital potential when used correctly

( Main factors driving the Forex market)

Currency prices do not occur spontaneously but are influenced by multiple factors:

• Central bank policies: Decisions on interest rates and money supply significantly influence currency values
• Economic data: Inflation rates, employment figures, trade balances reflect economic strength and currency health
• Cross-border investments: Trade policies, elections, and geopolitical conditions affect international capital flows
• Global market conditions: Changes in stock markets, commodities, and bond markets impact currency values
• Safe-haven currencies during crises: Strong currencies like the US dollar and Japanese yen become “safe assets” that investors flock to during economic uncertainty

The 3 Types of Forex Trading

1. Spot Market Trading(

This is a straightforward method where you exchange one currency for another, then when prices change, you can exchange back to realize profits or losses.

Limitations: Requires full payment upfront, limited currency options, high spreads, and not suitable for short-term trading.

) 2. Futures Trading###

Futures contracts are standardized products traded on official financial markets, such as USD Futures on the Thai TFEX or EUR/USD Futures on Chicago Mercantile Exchange.

Advantages: High liquidity, can use leverage, and trade almost all day.

Limitations: Large contract sizes, requiring substantial capital investment.

( 3. CFD Trading on Currencies)

Trading Contracts for Difference (CFDs) allows you to profit from price changes without holding the actual currencies.

Advantages: Low initial capital, high liquidity, leverage can be used, and trading nearly 24/5.

Limitations: High leverage increases risk; risk management is essential.

Which Currency Pairs Should Beginners Trade?

Choosing the right currency pairs makes trading easier. Criteria include:

• Liquidity: Popular pairs have narrower spreads and lower trading costs
• Volatility: Select pairs with moderate volatility to manage risk effectively
• Best trading hours: Although Forex is open 24/5, different pairs move actively at different times
• Economic news: Traders who follow news should monitor economic factors related to each country

Popular Forex pairs for beginners:

• EUR/USD: Highest liquidity, moderate volatility, suitable for short- and medium-term trading. Moves well during European and American market openings.
• USD/JPY: Good liquidity, low to moderate volatility. Can be volatile during Japanese central bank announcements. Moves well during Tokyo and New York openings.
• GBP/USD: Good liquidity, high volatility, influenced by UK-specific factors. Moves well during European and American market hours.

How to Start Forex Trading for Beginners

( Step 1: Choose currency pairs and platform

Select currency pairs matching your trading style. For professional trading, choose platforms with high liquidity and diverse pairs )e.g., USD/JPY, EUR/USD, etc.###.

( Step 2: Place buy/sell orders

Check current prices and analyze charts, then submit:

• Buy orders: When you expect the currency to strengthen. Correct predictions increase profits as prices rise.
• Sell orders: When you expect the currency to weaken. Correct predictions generate profits.

) Step 3: Set protective measures

Use Stop Loss orders to automatically close positions when losses reach a set point. Use Limit Orders to automatically take profits when prices reach your target.

Step 4: Monitor and wait to close positions

Observe price movements and margin levels. When losses or gains reach predetermined levels, close the position to lock in results.

Step 5: Analyze and improve

Review each trade to identify successes and failures. Trading is a repetitive process; finding what works well and repeating it is key to success. As Charlie Munger of Berkshire Hathaway said, “We must be mindful when things go well, and then try to repeat them. This is the basic step to success.”

Cautions When Trading Forex

1. Risks of High Leverage###

Leverage increases potential profits but also amplifies potential losses. Traders should choose leverage appropriate to market volatility and their capital.

( 2. Not Preparing for Volatility)

Forex markets can be highly volatile during economic events like central bank meetings, key data releases. Poor preparation can lead to significant losses. Always set Stop Loss and avoid trading during high-volatility periods.

3. Overtrading###

Frequent trading increases the risk of losses. Statistics show many traders lose money from small frequent trades more than from a single large trade. Only trade with a plan.

Summary

Forex trading offers various methods, but for beginners, CFD trading on currencies is flexible and accessible, requiring minimal capital and allowing diverse strategies. The Forex market provides opportunities to demonstrate trading skills, test new strategies, and hedge investment risks. However, understanding the risks and planning proper risk management are always essential.

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Investing involves risks and may not be suitable for everyone.