📘 Level 1 – Forex Basics

Forex (Foreign Exchange) is the global marketplace for trading currencies. It has no central exchange and operates 24 hours a day, 5 days a week.

Key Milestones

• 1944 – Bretton Woods: currencies tied to the US dollar and gold.
• 1971 – Nixon Shock: gold standard abandoned → floating exchange rates.
• Today: daily volume of $7.5 trillion, the world’s largest market.

Forex attracts millions of traders because of its unique advantages:

• 🌍 Accessibility: small accounts can start trading quickly.
• ⚡ Liquidity: no waiting — trades execute in milliseconds.
• 📈 Opportunities both ways: profit in rising or falling markets.
• 🕒 24/5 schedule: trade across global sessions.

Risks

High leverage means higher profit potential but also bigger losses. Risk management is critical.

The main players that shape price movements are:

• Central Banks: control interest rates and money supply.
• Commercial Banks: handle billions in currency exchanges daily.
• Hedge Funds & Corporations: speculate and hedge global risks.
• Retail Traders: millions of individuals with smaller accounts.

Currencies are traded in pairs (EUR/USD, GBP/JPY). The first currency is the base, the second is the quote.

Types of Pairs

• Majors: contain USD (e.g., EUR/USD, GBP/USD).
• Minors: cross currencies without USD (e.g., EUR/GBP).
• Exotics: emerging market currencies (USD/TRY).

Market Sessions

• 🌅 Asian: Tokyo, Sydney.
• ☀️ London: biggest liquidity.
• 🌙 New York: overlaps with London for high volatility.

• Pip: smallest price movement (1 pip = 0.0001 on most pairs).
• Spread: broker’s fee (difference between bid and ask).
• Leverage: borrowed capital. 1:100 → $100 controls $10,000.
• Margin: required deposit to keep positions open.
• Lot Size: 1 lot = 100,000 units, mini = 10,000, micro = 1,000.
• Order Types: market order, limit order, stop order.