What is Forex? Forex Basics for Beginners From Scratch (2026)

What is Forex?

Forex (Foreign Exchange) is the largest foreign exchange market in the world, with an average daily trading volume of more than $7.5 trillion. It operates 24 hours a day, 5 days a week, allowing traders worldwide, including those in Thailand, to buy and sell at any time. There is no central marketplace like a stock exchange; instead, it uses a network of banks and brokers (Over-the-Counter or OTC).

The goal of Forex trading is to profit from changes in currency values, for example, buying EUR/USD when the price is low and selling when the price is higher.

Currency Pairs

In Forex, every trade involves "exchanging" one currency for another. For example, EUR/USD = 1.0850 means that 1 Euro = 1.0850 US Dollars. Currency pairs are divided into 3 groups:

• Majors: EUR/USD, GBP/USD, USD/JPY, USD/CHF — Low spread, high liquidity.
• Minors / Crosses: EUR/JPY, GBP/JPY — Do not include USD.
• Exotics: USD/THB, USD/TRY — Wide spread, high volatility.

Pip and Lot — Essential Basic Units

Pip is the smallest unit of price change measurement. For most currency pairs, 1 pip = 0.0001 (4th decimal place), except for pairs involving JPY, where 1 pip = 0.01.

Lot is the contract size opened for trading:

• Standard Lot = 100,000 units → 1 pip ≈ $10
• Mini Lot (0.1) = 10,000 units → 1 pip ≈ $1
• Micro Lot (0.01) = 1,000 units → 1 pip ≈ $0.10

Beginners should always start with Micro Lot (0.01) to limit risk while learning real market behavior.

Leverage and Margin — A Double-Edged Sword

Leverage is when a broker lends additional money to open a larger contract than the actual capital. For example, a Leverage of 1:500 means that $100 can open a contract worth $50,000. Margin is the collateral locked when an order is open.

⚠ Warning: High Leverage = Faster profits, but also faster losses. Many novice traders get "margin called" (lose all their capital) because they use excessive Leverage. It is recommended to control risk per order at 1–2% of the portfolio, regardless of the Leverage.

How to Start Forex Trading in 5 Steps

1. Open a Demo account with a broker regulated by a Tier-1 authority (e.g., FCA, ASIC).
2. Install a platform like MT4, MT5, or cTrader on your computer/mobile.
3. Learn chart basics — candlesticks, support/resistance, Trendline.
4. Practice on Demo for at least 1–3 months, record every order.
5. Start a Live account with a small capital (e.g., $50–$200) and trade only Micro Lots.

Mistakes Beginners Should Avoid

• Not setting Stop Loss — Opening an order without a cut-loss point is a shortcut to losing all your capital.
• Trading emotionally — Seeking revenge on the market after a loss (Revenge Trading).
• Using too large a Lot size — Wanting to get rich quick with little money, therefore using heavy lots.
• Following news/gurus without understanding — Trading based on others without your own system.

Conclusion

Forex is not a shortcut to riches, but a skill that requires time to build. If you start correctly — choose a reliable broker, practice with a Demo account first, and have disciplined risk management — your long-term survival chances will be much higher. Next, I recommend reading about Technical Analysis and Risk Management.