Understanding Forex Trading: A Beginner's Guide

The foreign exchange (forex) market is the largest financial market in the world, with over $7 trillion traded every single day. Unlike stock markets, forex has no central exchange — it operates 24 hours a day, five days a week across global financial centres including London, New York, Tokyo, and Dubai.

What Is a Currency Pair?

Forex trading always involves two currencies simultaneously. When you trade EUR/USD, you are buying euros and selling US dollars (or vice versa). The first currency (EUR) is the base currency and the second (USD) is the quote currency.

The price tells you how many units of the quote currency you need to buy one unit of the base. If EUR/USD is 1.0850, you need $1.0850 to buy €1.00.

Majors, Minors, and Exotics

• Majors — Pairs involving USD: EUR/USD, GBP/USD, USD/JPY, USD/CHF. Highest liquidity, tightest spreads.
• Minors — Pairs without USD: EUR/GBP, EUR/JPY, GBP/JPY. Slightly wider spreads.
• Exotics — One major paired with an emerging market currency: USD/TRY, USD/ZAR. Higher spreads and volatility.

What Is a Pip?

A pip (percentage in point) is the smallest standard price movement for most currency pairs — the fourth decimal place. If EUR/USD moves from 1.0850 to 1.0851, that is a 1-pip move. For JPY pairs, a pip is the second decimal place (e.g. 145.00 → 145.01).

What Is a Lot?

Trade size is measured in lots:

What Is the Spread?

The spread is the difference between the bid price (what you sell at) and the ask price (what you buy at). This is the broker's fee. On Bevona Trade, EUR/USD spreads start from just 0.1 pips.

How Are Profits and Losses Calculated?

If you buy 0.10 lots of EUR/USD at 1.0850 and close at 1.0880, you gained 30 pips. With a mini lot, each pip is worth ~$1, so your profit is approximately $30 (before spread). If price moved against you by 30 pips, you would have lost ~$30.