💡Setting Expectations
Forget everything you've heard about forex. It's not gambling. It's not a get-rich-quick scheme. It's a skill—and like any skill, it can be learned.
But here's the truth: even skilled traders lose.
Consider this:
- Profitable traders can have 10 losing trades in a row—and still be profitable in the long run
- A 50% win rate is considered successful—meaning half your trades will lose
- Losses aren't failure—they're operating costs, like rent for a business
The difference between profitable traders and everyone else isn't avoiding losses. It's managing them. It's having a system where your winners outweigh your losers, even when you're wrong half the time.
If you're looking for a strategy that "wins most of the time," you're in the wrong place. But if you're ready to learn a real skill with real risks and real rewards—let's start with what forex actually is.
What is Forex Trading
Forex, short for foreign exchange, is the largest financial market in the world. Over $7.5 trillion is traded daily according to the Bank for International Settlements (2022).
Imagine a giant, decentralized airport currency exchange that never closes. When you trade forex, you're not buying anything physical. Instead, you are speculating on the changing value of one currency against another.
The core activity is the simultaneous buying of one currency and selling of another. This is why currencies are traded in pairs, like the Euro and the US Dollar (EUR/USD).
The goal is to profit from the fluctuations in their exchange rates. If you believe the Euro is going to get stronger against the Dollar, you would buy the EUR/USD pair. If you're right, you can later sell the pair at a higher price, and the difference is your profit.
Interactive Example
Let's walk through a real example. Imagine you have $2,000 and believe the US Dollar will weaken against the Japanese Yen. You sell your USD to buy JPY at the current rate of 100 JPY per USD, giving you ¥200,000. Use the simulator below to see what happens when you convert back to USD at different exchange rates.
Initial Investment
$2,000.00
Converted Amount (at 100 JPY/USD)
￥200,000
Profit / Loss
+$0.00
See Real Forex Trading in Action
Want to see how professional traders analyze and execute forex trades? Our market outlook posts break down real currency movements, explain what drives exchange rates, and show exactly how we identify trading opportunities in major pairs like EUR/USD, GBP/USD, and USD/JPY.
Each post provides detailed analysis of central bank policies, economic data, and technical setups.
Where Trading Happens
Unlike the stock market, which is often centralized around an exchange like the NYSE, the forex market is a decentralized, over-the-counter (OTC) market. This means trading occurs directly between participants through a global network of banks, financial institutions, and brokers, not in a single physical location.
This decentralized structure is what allows the forex market to operate 24 hours a day, five days a week, as the trading "baton" is passed from one major financial center to the next. The main benefits are deep liquidity and constant access, but it also means there's less regulation compared to a central exchange and prices can vary slightly between brokers.
Centralized (Stock Market)
Decentralized (Forex Market)
How to Connect to the Forex Market
As a retail trader, you need a broker to act as your gateway to the forex market. Think of them as your agent. Brokers must be regulated by financial authorities like the CFTC (US), FCA (UK), or ASIC (Australia) to ensure they meet strict standards. Here's a simplified breakdown of the two main types:
B-Book: Dealing Desk Model
A Market Maker broker acts as the counterparty to your trades. When you buy EUR/USD, they sell it to you from their own inventory. Your order never reaches the interbank market—it's handled internally.
How It Works:
- You click "Buy 1 lot EUR/USD at 1.1000"
- Broker sells you 1 lot from their virtual inventory
- Your order never leaves the broker—it's matched internally
Key point: When you profit, the broker loses. When you lose, they profit.
Advantages:
- • Fixed, tight spreads (1-2 pips)
- • Guaranteed execution, no requotes
- • Instant fills in volatile markets
- • Lower minimum deposits
- • Can trade micro/nano lots
Disadvantages:
- • Conflict of interest
- • May widen spreads during news
- • Potential for stop hunting
- • Winning strategies may get restricted
Note: B-Book isn't automatically bad. Many legitimate brokers use it because most retail traders lose anyway. This lets them offer better spreads and faster execution. Problems arise with unregulated brokers who manipulate prices.