Explaining Forex trading for beginners (simplified guide from scratch)

Explaining Forex trading for beginners (simplified guide from scratch)

In the year 2019, specifically in the month of June, I decided to search for the first time to explain Forex for beginners.

The real reason behind this was one of the YouTube videos I saw talking about the huge profits that can be made from Forex trading.

Since then, I have been constantly researching and experimenting with many strategies spread abroad, in addition to many Forex companies.

But I still do not see any comprehensive guide to trading from scratch for beginners who do not know anything.

Therefore, I decided to summarize what I learned in previous years in this guide, and although it is a non-professional guide (since it is for beginners), it will help you greatly in learning the basics of this field in order to determine whether you will take the risk and enter it or whether it is a field that is not suitable for you. .

Now let’s start with the traditional beginning and tell you…

What is Forex?

Forex is a compound word made up of two syllables : For , which is an abbreviation for the word Foreign, which means foreign, and EX , which is an abbreviation for the word Exchange, which means exchange. This is what makes the definition of Forex the basic foreign currency exchange market .

If we look at the bigger picture, we will find that Forex is one of the types of so-called financial markets that contain a seller and a buyer. Every time you buy a currency, another person sells it, and when you sell, another person buys, and so on.

There are many types of financial markets, the most important of which are: 

  • Digital currency market
  • real estate market.
  • Stock and bond markets (securities).
  • Derivatives market.
  • Commodity markets.
  • And others…

However, Forex remains at the forefront of all types of financial markets in terms of daily trading volume, which according to the Bank for International Settlements amounted to approximately $6.6 billion in 2019 , surpassing stock markets.

So if you think that this market will end soon, imagine the amount of loss that may occur in the market.

But what primarily motivates you to trade foreign currencies?

This brings us to the second part of this simplified guide, which is…

Why invest in Forex?

There are some things that you will find many sites talking about and consider among the most important features of Forex, such as:

  • Timely execution of deals. Once a deal is placed at the market price, it will be sold immediately and do not wait like the stock exchange, for example.
  • You do not need a brokerage company. You can start using a computer or phone through trading platforms.
  • Trading is open 24 hours a day, 5 days a week, unlike the stock market, which closes at 2 p.m.
  • There are no commissions in most reliable companies, only the price difference between buying and selling.
  • The liquidity available in Forex is very high so you will always find a buyer.
  • It provides huge data and information abroad that can teach you trading, unlike many other investments.

But from my point of view, there is one advantage that is considered the most important and that makes you and many people go to trading in the Forex market, which is:


I explained leverage in detail before, so be sure to check it out.

But in short, leverage is a means that enables you to double the amount you are trading up to 500 or 1000 times, and thus when you achieve a very small profit, it is doubled by the same amount.

Example 1 if you do not use leverage: You traded $100 on a currency pair (EUR/USD) and your profit from buying and selling was $1.  When you close the deal, your profit is only $1, right?

Example 2: If you use leverage: Your trading amount is fixed, which is $100, but you decide to use a leverage of 300%, then your profit from the deal that we mentioned above will be $300.

This is a very simple example just to understand the principle, but if you want to know more information and a more detailed explanation, I advise you to read the topic that I shared with you above.

Conclusion: Everyone invests in Forex because of the huge profits that can be achieved by using the financial leverage provided by companies.

Don’t forget to read:Is making money from the Internet through Forex and other things real?

Forex trading risks

There is a very famous saying in this field that you will find spread on most websites:

90% of people who trade Forex lose money.

Unfortunately this is true!!!

The main reason for this is that many of those who start out are in a hurry to make money (who are mostly beginners like you and me).

This makes them quickly use very high leverage, and as soon as there is a slight decline in the price of the pair they are trading on, they find themselves losing all of their money that they deposited, or at least a large part of it.

Therefore, you should know that Forex is a very high-risk investment, and therefore any amounts you decide to trade in this field must not depend on your life.

The most important advice now is not to use high financial leverage or risk amounts you need in your life.

There are some other risks that you may face, such as:

  1. The company scams you: This happens often, especially with unreliable companies that you find making unreasonable offers.
  2. Freezing your account: Especially if you use banking information different from your identity information.
  3. Inability to receive money: If the method of receipt is not available in your country.
  4. Giving your money to other people to trade instead of you: This is one of the strangest things that I am surprised by. Do not do this because you will most likely be scammed.
  5. Following some people’s advice without thinking: Beginners often fall into this trap, so learn for yourself and decide alone, according to your personal comfort, whether the deal is worth entering into or not.
  6. Trading at inappropriate times: There are some times when you can achieve excellent profits and other times when there is no significant movement. Choose the appropriate time.
  7. There are some psychological damages that may affect you, such as stress: so always maintain your calm to make correct decisions.

Now let’s get to know one of the most common questions that you are surely wondering on your mind right now…

What is the minimum amount to start Forex trading?

Some companies, such as Exness and Iqoption, allow a minimum deposit of $10.

So, theoretically, the minimum amount you can start with is $10.

But you will find many websites and old traders advising you to set the minimum amount of $100-$500.

From my point of view and personal experience, the minimum amount suitable for Forex trading is $50.

The reason is the following:

  • When you start with a small amount such as $10, you will face two problems: (The decrease in the amount of the transaction that you can enter into, the maximum amount is your capital is only $10) (The second problem is the ease of losing your capital once there is a slight drop in prices, especially with the use of leverage).
  • Large amounts such as $100-$500: Many beginners may not be able to risk them or even save them.

But if you start with only $50, then: 

  • You can enter into deals with $10 or $20, for example, and you still have other dollars to trade again.
  • You can tolerate price movements even when using financial leverages. If the price drops in an instant by $0.001 when trading with a capital of $10 and you are using 1000% leverage, this means a loss of $10, but since your capital is $50, the deal will continue and will not be forced to close until the price rises again. You will make a profit, but if your entire investment amount is $10, you will lose your entire capital, even if the price rises in the next moment.

I don’t know if it’s difficult to understand or not, but I’m sure you understand the basic principle.

Now let’s get to know…

Who trades in this market?

If you are over the age of 18, you can definitely trade Forex.

This means that those who trade are natural persons over the legal age.

But although this is true in many countries, in our Arab countries, especially Egypt, the lowest starting price is 21 years old. This is because you will need a bank account, and in order to open a bank account you must be over 21 years old.

But who else trades Forex other than ordinary people?

  • Banks, especially commercial ones.
  • Investment and financial companies that need to purchase specific currencies for their business.
  • Central banks in various parts of the world.

Since these entities have existed since the beginning of the financial system, if individuals profit from Forex, it will continue as long as these companies and banks still exist.

Now let me answer one of the questions that beginners often ask before entering this field, which is:

Is Forex trading safe?

Or in other words, who regulates online Forex trading?

For example, if you intend to buy shares from the stock exchange, you will go to reliable stock brokerage companies.

But if you want to trade currencies online, where will you go?

You will definitely go to reliable Forex trading companies.

Here comes another important question…

How can I know if the company I want to deal with is reliable or not?

The answer to this question is very simple, as you can simply verify it by:

  • First: The licensing authority to which the company belongs.
  • Second: Reviews of other traders of the company.

Unfortunately, because I told you that this explanation will be for beginners, I will not discuss the types of licenses regulating companies and others.

But if you want to know more, go up 7 paragraphs and you will find a link with many details about the companies and their regulators.

Conclusion: Forex in general is safe (I am not talking about risk here) and trading in it does not have any problems, but only if the platform through which you trade is reliable.

You may also wonder whether Forex trading is legal?

In fact, no law has been issued yet to criminalize the criminal. The only thing punishable by law is exploiting other people’s money and trading on their behalf (risking other people’s money with the aim of making a profit).

How to get your money from companies?

Withdrawal and deposit are among the most confusing things for a large number of beginners.

So let me make the whole process easier for you.

Whether withdrawing or depositing, this is done through: 

  • Card: Either Visa or MasterCard, depending on the card you use (I do not prefer this method).
  • Bank account: This is a somewhat difficult method and involves some steps that may be a little complicated.
  • Electronic banks : the most famous of which are Skrill and Nettler, which are considered the best for dealing in Forex.

It’s very easy. All you have to do is:

  • It is to create a Skrill account and activate it with your documents.
  • Then make a deposit in it or buy a balance from any broker if the bank does not support deposits in your country.
  • After that, you enter the platform through which you work, select the Skrill deposit method, for example, specify the amount, and then simply make a deposit.
  • You will find the balance in your account on the platform within a few seconds.

Note: Skrill Bank is my preferred method of dealing, whether with Forex companies or binary options trading platforms, so if you want to know more details about it, I have put together a guide for you explaining Skrill Bank and everything related to activation, withdrawal, and deposit .

As for withdrawals, the matter is simple:

The method through which you deposited is the only method through which you are allowed to withdraw.

Suppose that you deposited via Visa, then the only method available to you to withdraw is via the same Visa. You cannot withdraw via Skrill, for example, or any electronic bank, or even your bank account.

If you deposit in more than one way, you can withdraw through all of them, but at the same deposit rates.

For example, you deposited $50 via Skrill, $30 via Visa, and $20 via Neteller, and you traded and your account balance reached $500, so you can withdraw: 

  • 50% of the amount (i.e. $250) via Skrill.
  • 30% of the amount ($150) via Visa.
  • 20% of the amount ($100) via Neteller

And so on.

Now let’s get to know me…

Basic terms you need to know in currency trading?

There are some terms you should know before you start trading.

These terms are the first step to understanding what you may hear in training courses or find inside the platforms.

So let’s get to know the most important of these terms very briefly:

  • Leverage : Financial leverage, and we talked about it before.
  • Currency pairs: As I mentioned before, Forex is traded in EUR/USD pairs, for example.
  • Base currency: It is the first currency in the pair. In the previous example, the Euro (EUR) represents the base currency.
  • Major currencies: These are all currency pairs from which the US dollar is used, such as GBP/USD or USD/JPY and others.
  • Hybrid currencies: currency pairs in which the American country is not a party, such as GBP/JPY, EUR/JPY, and so on.
  • LOT : Or lot in Arabic, which means the number of trading units or trading volume, and in its standard form, it contains 100,000 units of the base currency. It varies depending on the company through which you trade. There are companies that allow trading through a full lot, others 0.1 lots, some 0.01 lots, and there are now some platforms that allow you to trade with 0.001 lots.
  • PIP: or point, which is the fourth number after the decimal point in the price. For example, if the price of the EUR/USD pair is 1.2635, then when the number 5 digits moves up or down, we say a point move.
  • Used Margin: The amount you used in the transaction from your account.
  • Usable margin: The amount remaining in your account after deducting the amount you used in the previous deal, and you can use it to enter into new deals.
  • Margin call: It is a warning message that the Forex company sends to you when your account balance approaches zero so that you either close the deal or deposit more money to continue the deal.
  • Auto closing: Forced closing. Here, the company automatically closes the deal without your permission if your account balance reaches zero so that the loss is not negative.

You may find the terms a little difficult, and I do not expect you to memorize them, but I have included them only so that you have an initial idea of ​​the meaning of each of them.

Now let’s get to know me…

How to know if the transaction is a buy or sell?

There are two ways to trade:

  1. Random trading: Here it is more like gambling, and therefore loss is the natural result or gain once or twice at most.
  2. Thoughtful trading based on analysis: Here you need two types of analysis:
  • Fundamental analysis: which depends on the news of each country and each currency, thus making the correct decision to buy or sell.
  • Technical analysis: It is the most widely used by many traders and is based primarily on chart analysis (price movements for a specific period of time).

Whatever type you will rely on when choosing the type of deal you intend to enter into, know that no one can make the correct prediction at all times of trading.

But certainly, when you follow analysis methods, you will reduce the loss by a very large percentage.

Note: Mastering technical analysis and then combining it with fundamental analysis and following the news is considered the best strategy in order to ensure the correctness of the deal decision that you will trade.

Another note: With trading for long periods, you will recognize the type of deal just by looking at the chart.

How do you and Forex companies profit?

How to win is very easy, and I think you already know it from the words above.

Buy at a lower price and sell at a higher price and the price difference is your profit, or sell at a higher price and then buy again at a lower price and the price difference is also your profit.

But how do Forex platforms profit?

Have you ever gone to exchange your country’s currency for another? Whether in a bank or an exchange office?

In both cases, you will find the purchase price different from the selling price.

The price difference between buying and selling is simply the Forex companies’ profit.

Therefore, the larger the amount you trade, the larger the price difference between buying and selling, the greater the platform’s profits, and for this reason it offers you financial leverage.

Now to the important part for those who want to start after this information, which is…

The best Forex trading platforms for beginners

There are many platforms that can be considered good to start, but for beginners there are (in my opinion) 3 good platforms, which are:

1- Exness platform 

  • The minimum deposit is only $10.
  • The minimum amount to enter a trade is $1.
  • It provides various methods for withdrawal and deposit, including Skrill.
  • Dealing on the platform is easy, either by downloading its program or application, or you can trade directly through the website.
  • It provides a demo account for $10,000 from which you can learn and experiment.

Register with exness

2- Fbs platform

FBS is also one of the platforms that is very famous in the Arab world.

Perhaps the main reason is the bonus it offers, in addition to the great ease of trading on the platform.

  • The minimum deposit is $1.
  • The platform offers leverage of up to 3000%.
  • Provides withdrawal methods, including Skrill and Neteller.
  • The company is reliable and has many licenses.

3- Iqoption platform

Iqoption is not primarily considered a Forex platform, and you will find me listing it among the binary sites.

However, it offers the possibility of trading Forex from within the site, but with a slightly higher commission than other companies.

  • It offers a minimum deposit of $10 and you can only withdraw from $2.
  • You can deposit through Visa or various electronic banks.
  • The minimum transaction amount is $1.
  • Offers leverage of up to 300%.

Register on Iqoption

You may also like:Explanation of the Iqoption website with my personal experience

Tips for beginners in Forex trading

  • Always start with a demo account before depositing any money.
  • Try to control your emotions and start dealing with deals more calmly (the more stressed you are, the more wrong decisions you will make).
  • Choose a reliable company or broker with good reviews.
  • Use moderate leverage (never use very high leverages).
  • Do not start with large amounts of money at the beginning of your journey. Start with small amounts of money ($50 is enough in the beginning).
  • Follow and learn constantly from the most famous traders in the field, but follow your own strategy and do not copy anyone else’s strategies.
  • Be patient and do not lose hope in the beginning. All traders lose some money in the beginning before they achieve a good return on their investments.

The best sources for learning trading from scratch

If you intend to start in Forex, you have a long way to go and learn.

Although much of the information out there may be more harmful than useful, I was able to compile for you a package of tools that may actually benefit you and provide you with excellent information.

The most important of these sources are:

  • Your personal experiences: (the first source of learning) Start by registering on one of the platforms, use the demo account, make many trades, follow the price movement, etc., and with time you will find yourself able to trade initially.
  • Sherif Khorshid’s course : Aside from some of the sayings spread abroad, Sherif Khurshid’s course is considered one of the best free sources for teaching Forex in the Arabic language (free on the course website ).
  • Arab Trader Course : A free course (which consists of educational articles) with a lot of excellent information for beginners. There are also important topics for teaching analysis.

With this, we have completely finished explaining Forex for beginners.

Now I need you to tell me…

Was the guide useful and did you learn information you didn’t know? Or was it difficult to understand and you did not find what you were looking for?

Whatever your experience, I ask you to share it with me so that we can know whether the topic should be improved or if it is just so good.

Do not hesitate to contact us through the comments or our Facebook page if there is something you would like to ask about.

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