There are three main types of FX trading: speculation, investing and hedging. Speculative forex trading involves short-term positions, while investors in the FX market tend to keep their positions open for a longer period. Of course, there is no strict cut-off time for when a position is considered an investment rather than speculation. It’s more of a sliding scale.
Hedging is about managing risk. A person or a legal entity can purchase currency or FX derivates to mitigate other risks. A company that receives most of its earnings in one currency but have expenses in another can, for instance, use FX hedging to manage the currency risk. They want to protect themselves from the risk of losing a lot of money if the first currency drops sharply in value in relation to the other currency.
Another alternative if you want to make money on the FX market is trading CFDs or currency-backed binary options. Binary options allow you to make larger profits with a limited downside. You never risk losing more money than you have lost. You can learn more about Binary Options by visiting binaryoptions.net.
Basics of Retail Forex Trading
Currency Pairs
Forex trading revolves around currency pairs, where one currency is exchanged for another. Each pair consists of a base currency and a quote currency. For example, in the EUR/USD pair, EUR is the base currency, and USD is the quote currency. The price of the pair indicates how much of the quoted currency is needed to purchase one unit of the base currency.
Leverage
A hallmark of forex trading is the use of leverage, which allows traders to control a large position with a relatively small amount of capital. While leverage can amplify profits, it also increases potential losses, making it crucial for retail traders to understand and manage the associated risks.
How to Start Forex Trading
Forex trading has exploded in popularity, and it’s easy to see why. The market is open 24 hours a day, five days a week, and it offers the chance to trade global currencies from your phone or laptop. But while it’s easy to open an account and get started, actually becoming long-term profitable is where most new traders stumble, and many novice forex traders burn through their trading capital very fast and end up with zero.
Forex trading is not a get-rich-quick scheme; it is a serious endeavor that requires knowledge, effort, and plenty of discipline. This aim of this guide is to walk you through some of the early steps in a straightforward, realistic way—no hype, no shortcuts, just what you need to get going.
What Forex Trading Actually Is
Forex (short for “foreign exchange”) trading is about trading one currency for another, trying to profit from the way exchange rates move. It’s all done in pairs—like EUR/USD or USD/JPY. When you buy a pair, you do it because you believe that the first currency will increase in value compared to the second. If I think the Euro is about to increase in value against the United States dollar, I will purchase EUR/USD, which means I purchase Euro and pay with U.S. dollars. For this currency pair, EUR is the base currency and USD is the quote currency.
Learn the Core Concepts First
Before you trade a single penny, it is advisable to get familiar with the basics of forex trading. You’ll need to understand how pips (price movements) work, how lot sizes affect your risk, what terms like leverage and margin actually mean, and much more.
It’s not about mastering every technical detail at once, but you should know basic facts such as:
- How much a pip is worth in real money for this currency.
- How spread and commissions work.
- How stop-loss and take-profit orders can help with risk management.
- How Central Bank interest rate announcements tend to impact currency prices on the forex market.
- While you are in the process of evaluating brokers, it is also a good idea to learn about some common financial scams and how to spot warning signals.
With just a bit of time, effort and the right resources, you can learn the basics, and having this knowledge will puts you ahead of most new traders. A lot of people see an appealing forex add or watch a finance YouTube video, decide to jump right into forex trading, do not employ any sane risk-management strategy, and burn through their account balance in not time. Avoid being that kind of person.
Develop a Trading Strategy and a Risk Management Plan
There are endless strategies in forex: trend trading, scalping, breakout trading, swing trading, position trading, and more. You don’t need to try them all. Learn about them, and pick one that fits your schedule, risk-willingness and mindset.
If you love being hands-on and making quick decisions, one of the day trading strategies may be a good fit for you. If you want less intensity, but is okay with the risks associated with keeping positions open over night, swing trading might be your thing. What matters is having a system you can repeat and improve step by step —not jumping to an entirely different strategy every time something doesn’t work.
You also need to develop a risk management plan that works well in conjunction with your forex trading strategy. A proper risk-management strategy is often what separates the long-term profitable forex traders from the ones who burn through their account balance in no time.
Choose a Broker That Works for You and Your Forex Trading Plan
It is important to pick a broker that is suitable for you, your trading strategy and your risk management routines. Don’t get swayed by flashy ads. Focus on trust, reputation, and usability.
- Some brokers are regulated by trusted financial authorities, while others are regulated by lax countries or unregulated.
- Some brokers are geared toward professionals and big traders, while others are more used to caring for beginners and small-scale hobby traders.
- Make sure the broker offers the trading pair your strategy was developed for, and that you will get excellent conditions for trading this specific pair, e.g. when it comes to spreads and commissions.
- Look at all the miscellaneous fees, e.g. overnight fees (swap fees), withdrawal fees, platform fees, etc. They can erode your capital over time.
- Make sure the trading platform is quick and easy to use.
- Make sure the trading platform comes with the risk-management tools you need, e.g. when it comes to order types.
- If you plan on using technical analysis, it can be nice to pick a broker where the trading platform comes with a lot of support for technical analysis.
- Skilled and helpful customer support is important.
- Do not sign up with a broker that will not let you explore the platform using a free demo account.
Use a Demo Account Before Signing Up
Most brokers offer free demo accounts that let you trade with fake money in real-time market conditions. We strongly advice you take this opportunity to check out the broker and the platform before you sign up and make any deposit.
If the broker is unwilling to give you access to a demo account before you have made your first deposit, that is a bit of red flag. Reputable brokers that know they have a great platform will normally be really happy to see you sign up for a free demo account. They will fill it with plenty of play-money (e.g. $10,000) and let you use the demo account for a long time, so you can fully explore the platform without any stress.
Some of the reasons why using a demo account is great:
- You can see if the platform works well with your trading strategy, risk-management routines, and personal preferences – before you commit to a broker.
- You can learn how your broker’s platform works. Do all those beginner mistakes with play-money instead of real money.
- You can develop a feel for how the forex market moves, without putting any real money at risk while you learn the basic.
- You can see how you trading strategy and risk-management routines work against real price data. Maybe there are some adjustments that should be made before you switch to real money trading.
Start Small and Protect Your Capital
When you finally make the move to live trading (real money trading), keep it small. Risk only what you’re comfortable losing. The goal at this stage isn’t to double your money—it’s to stay in the game and learn. Even if you have a lot of experience from the demo account, you do not know much about how you will react to having real money at risk.
Risk management is everything. No forex trader makes a profit from every trade. The key is to protect your capital and ensure the losses can not wipe out your account. You need to consistently make enough profit from the profitable trades to more than cover the losing trades.
You should always know how much you’re willing to lose on a trade before you even open the position. That means using stop-loss orders and avoiding over-sized positions. A good rule of thumb is to risk no more than 1–2% of your total trading capital per trade.
Having a pre-defined exit point where you let a take-profit order kick into action is also advisable, as it can prevent you from letting greed overwhelm you and make you stay with the position open for too long.
Most novice forex traders who lose all the money in their account do not lose it because they picked the wrong currency pair or trading technique—they lost it because they took on too much risk and/or traded emotionally.
How to Choose a Forex Broker in the UK
Getting started in forex trading is easier than ever, but finding a broker that is trustworthy and suitable for your trading strategy, risk management routines, and preferences? That still takes some effort.
With dozens of brokers offering flashy features, tight spreads, and “commission-free” trading, it’s tempting to jump into the first one that looks slick. But not every broker is worth your time—or your money.
Below, we will take a look at several things that really matters when choosing a forex broker in the UK, and how to increase your chances of finding the best choice for you.
Regulation
If you’re based in the UK, the most important box to tick is FCA regulation. The Financial Conduct Authority (FCA) oversees financial services firms in the UK and sets strict rules for how brokers must operate.
Among other things, a broker regulated by the FCA is required to:
- Keep your money separate from the company’s operational funds. This makes it much easier for your to get your money back if the broker becomes insolvent. When a brokerage company is mixing client funds with company funds, it creates a totally different legal situation and you may not be able to get any money back, or you will only get part of it.
- Give retail trader accounts (accounts held by non-professional traders) negative balance protection, so retail traders can’t end up in the red. Without negative trading account balance protection, a trader can end up owing the broker money from leverage trades.
- Be part of the Financial Services Compensation Scheme (FSCS), which protects up to £85,000 of your funds if the firm collapses and is unable to honor its financial obligations to the traders.
- Cap leverage for retail traders, in accordance with the FCA rules. For major currency pairs, the cap is at 1:30. For other pairs, it is even lower.
Any broker that isn’t FCA-regulated (and doesn’t have a clear, verifiable licence number) isn’t worth the risk for a UK trader.
Note: Some fraudsters lie and claim to be FCA regulated, so always verify directly with the FCA. Their official site contains a wealth of information.
What Can You Trade and How?
Forex brokers vary in which currency pairs they give you access to. Pretty much all of them offer the major pairs like GBP/USD and EUR/USD, but if you want to trade specific minor pairs or exotic pairs you may need to be more picky when selecting a broker.
Examples of other things to look for:
- Depending on your trading strategy, you may want to look for a broker that offers forex-based Contracts for Difference (CFDs), forex index speculation, or cryptocurrency speculation.
- Does the broker allow hedging, scalping, or other trading styles that you will rely on?
What Are the Real Costs?
“Commission-free” is a nice headline, but brokers still make money—and traders are paying in some way or fashion.
Things to look for:
- Is the commission-free trading only for certain currency pairs or under certain circumstances? Does this fit your trading plan?
- Spreads. Spreads it the difference between the buying and selling price. The tighter the spread, the less you’re giving up on every trade. Some no-commission brokers charge wider spreads to compensate themselves.
- Overnight fees (called swaps or rollover charges). Does your trading plan involve closing all positions before the trading day is over, or do you need to take overnight fees into account?
- Fees for processing deposits and/or withdrawals
- Currency conversion costs
A good broker keeps it transparent and doesn’t bury fees in the fine print. It should be easy for you to calculate what it would cost to use this specific broker for your trading plan.
Note: Some brokers have different account types available, with different fee structures.
Giving a recommendation about which forex broker that is best for all UK forex traders is not possible, since your trading strategy will impact how much it costs to use a particular broker. Broker A might be ideal for Sarah, but totally wrong for Peter. In order to compare brokers in a useful manner, you need to compare how well suited they are for your particular trading strategy. A broker offering tights spreads and low commissions on USD/EUR trading is great for USD/EUR traders, but not for someone whose special niche is USD/SEK or GBP/JPY.
Later, when you have become more experienced, you may wish to juggle several trading strategies, e.g. scalping USD/EUR while also swing trading one of the minor currency pairs. As you branch out, it can be a good idea to evaluate and sign up with an additional broker, because the broker that is ideal for Strategy 1 might be less than optimal for Strategy 2. It is better to have two different brokers than settling for a lukewarm compromise.
Always Try the Platform in Demo Mode Before Your First Deposit
You’re going to spend hours staring at charts and placing trades, so your broker’s trading platform needs to be clean, fast, and easy to navigate. Before you sign up with a broker and make your first deposit, make sure you explore the trading platform using a free demo account filled with play money. You want to find out early if the platform is not a good fit for you and your forex trading strategy.
Many of the brokers that are active on the UK market will give you access to one of the main independent platforms – sometimes alongside their own proprietary platform. Examples of well-known independent trading platforms are cTrader, MetaTrader 4 (MT4), and MetaTrader 5 (MT5).
Examples of things that are important:
- A user-friendly interface where you can navigate and place trades quickly, without delays. If the platform feels clunky or over-complicated, it’ll slow you down when it matters most.
- Being able to use the order types you need for your strategy and risk management, e.g. stop-loss and take-profit orders.
- Being able to access the platform on both desktop and mobile. Even if you do most of your trading and account management on your desktop computer, it is good to be able use the phone in a pinch.
- View live charts and use at least basic technical analysis tools.
How’s Their Support?
Even with the best brokers, things occasionally go wrong, or you need guidance through a certain process. Platforms freeze, trades don’t close as expected, or you have questions about withdrawals. When that happens, you want fast, human support—not a robot that loops you back to the FAQ page.
Look for brokers that offer:
- Live chat or phone support during your trading hours. 24/7 or 24/5 is best.
- Quick and helpful responses.
- Real, knowledgeable staff—not just scripted answers.
Test them before you commit. Ask a question via email or live chat and see how long they take to get back to you. Their response now is a good preview of what to expect later.
Learning Tools Are a Bonus
If you’re new to forex, brokers that offer educational content, tutorials, webinars, and analysis tools can give you a head start. Some FCA-licensed brokers have excellent resource centers where you can learn technical analysis, trading psychology, or even how to develop a trading plan.
An educational center is not essential, but it’s useful—especially if you want to sharpen your skills as you go. With that said, we do not recommend that you get all your information from your broker. It is always a good idea to be a critical consumer and get your input from several different reliable sources.
How to Open a Real-Money Forex Trading Account
So you’ve done the research, compared the various offers, used demo accounts, and finally picked a forex broker that feels right. That’s a solid start—but now comes the practical part: opening your trading account.
This process is pretty straightforward, but it’s about more than just clicking “Sign Up” and transferring some money. It’s about getting verified, understanding your options, and making sure everything is set up correctly before you place your first trade.
Registration
Head over to the broker’s website and look for the button that says something like “Open Account,” “Start Trading,” or “Register.” This will take you to a short online form where you’ll enter your basic personal details: your full name, email address, phone number, and residential address. It’s important that the information you enter here matches your official documents. Your broker will use these details later to verify your identity, so don’t cut corners or guess your way through it. If your ID card and passport say William, do not register as Bill.
Choose the Account Type That Suits You
Some brokers offer more than one type of trading account. If you’re a beginner, a standard or micro account with low minimum deposits and smaller lot sizes is usually a good fit. More experienced traders might go for ECN or raw spread accounts with tighter pricing and faster execution.
Take a moment to read the descriptions carefully. Some brokers also ask questions about your trading experience and financial background, which they use to suggest the most suitable account type under regulatory guidelines.
Complete Identity Verification
Before you can fund your account or place trades, your FCA-licensed broker is legally required to verify your identity.
Some brokers will also do the full Know Your Customer (KYC) and Anti-Money Laundering (AML) process at this stage, while others will wait with those parts until you make your first withdrawal request.
You’ll need to upload two things for the basic identity verification process:
- A valid photo ID, like a passport or driver’s license
- Proof of address, such as a utility bill or bank statement no older than three months
Most platforms let you upload these documents directly through your account dashboard. Some brokers verify you instantly using automated tools, while others might take a day or two.
Make Your First Deposit
Once you’re verified, you’ll be able to access your live trading account and add funds. The deposit section usually offers several options—bank transfer, debit or credit card, PayPal, or other e-wallets.
Choose the method that suits you best, and always check if there are any deposit fees or currency conversion charges, especially if your broker holds funds in a different currency. Withdrawals are normally done using the same method as the deposits, so check for withdrawal costs as well.
Note: Brokers in the UK are not permitted to give retail traders welcome bonuses, first deposit bonuses and similar. This type of bonus used to be common, but the authorities clamped down on it, because some brokers abused it by offering big bonuses with (very fine print) bonus conditions that made it difficult for hobby traders to ever clear the bonus requirement and be able to make withdrawals from their account. Many financial authorities around the globe have therefore banned the practice of using welcome bonus money to lure in new retail traders.
Set Up Your Trading Platform
Once your account is funded, you’ll receive information about how to log into the trading platform. You may for instance get an account number and a password.
At this point, you should already be pretty familiar with basic layout of the platform, because you explored it in demo account mode before you signed up with the broker. The next step is to customize it according to your preferences and needs, e.g. by adjusting chart settings, creating a watchlist of your preferred currency pairs, and set up alerts if needed.
Take It Slow and Stay in Control
Just because your account is funded and live doesn’t mean you should rush into your first trade. If you’re still learning, it’s smart to continue practicing in a demo environment or place very small live trades while you build confidence. Practicing in demo mode is great, but will not prepare you for the emotions that come with putting real-money on the line.
Use this phase to develop good habits rather than expect big profits. Get into the habit of setting clear risk limits, using stop-loss and take-profit orders, and keeping track of your trades. Your long-term success depends on patience, discipline, and your ability to learn and adjust.
How to Deposit Money Into Your New Forex Trading Account – A Step-By-Step Guide
Above, we have talked a bit about funding your new trading account by making your first deposit. Now, we will take a closer look at how that actually works, step by step. The exact steps can vary somewhat between different brokers, but this is how it generally works.
1.) Log Into Your Broker’s Client Portal
FCA-regulated forex brokers give you access to a secure client area or dashboard. This is separate from third-party trading platforms like cTrader, MT4 and MT5.
Log into the client portal using your login credentials. With many brokers, it will be the email and password you registered with.
When you are logged in, look for a clearly labeled section like “Deposit,” “Fund Account,” or “Add Funds.” Click on that, and you’ll be taken to the funding options.
2.) Choose Payment Method
Most brokers offer several ways to deposit funds.
Examples of common methods:
- Debit or credit card – Fast and easy, and funds usually appear within minutes
- Bank transfer – Secure and often low-cost, but can take 1–3 working days
- E-wallets (like Skrill, Neteller, and PayPal) – Often very fast
3.) Enter Deposit Amount and Currency
Once you’ve picked your method, you’ll need to enter the amount you want to deposit.
If you’re just getting started, there’s no need to max out your deposit limit. Start with an amount you’re comfortable trusting this broker with. You can always top up later once you’ve settled into your trading routine.
Some brokers allow deposits in multiple currencies (e.g. GBP, USD, EUR), while others automatically convert to one specific currency.
If the currency you’re depositing doesn’t match your trading account’s base currency, check for any conversion fees. Even a 1–2% fee can add up over time, especially with multiple deposits.
4.) Confirm the Details and Make the Payment
Double-check the amount, currency, and payment method before confirming. Once you confirm, you’ll be redirected to a secure payment page if using a card or e-wallet, or shown bank details if choosing a bank transfer.
For bank transfers, make sure to include your account ID or reference number in the payment description. This helps the broker link your payment to your trading account quickly.
5.) Wait for the Funds to Show Up in Your Trading Account
- Card payments and e-wallets are usually instant or show up within an hour.
- Bank transfers may take 1–3 business days depending on your bank and the broker’s processing speed.
You’ll typically receive an email confirmation once the deposit clears, and your account balance will update in your client portal and on your trading platform. With some brokers, you can add your phone number to get a confirmation sent directly to your phone.
Forex trading strategies
Bladerunner
This strategy is a price action strategy utilized for all currency pairs. It can be used for short-term, medium-term and long-term positions.
Bollinger Band Bounce
This strategy was developed for raging markets. Using it together with confirming signals rather than alone is advisable.
Daily Fibonacci Pivot
This strategy is based on the Fibonacci sequence and is normally used for daily pivots only (any number of pivots). Fibonacci retracements and extensions are combined.
Overlapping Fibonacci
This is another FX strategy based on the famous Fibonacci sequence. Using it together with confirming signals rather than alone is advisable.
Pop ‘n’ Stop
A method for increasing your ability to correctly predict if the price will continue to rise when you have spotted an upward trend.
FX scalping
FX scalping is a method of arbitrage. The successful FX scalper makes a profit by exploiting small price gaps created by the bid-ask spread. FX scalping is popular among FX day traders. One advantage of this method is that you can make money even when the bid price and ask price aren’t moving. Scalpers love stable markets.
Traders involved in FX scalping will simply buy at the bid price sell at the ask price, and pocket the difference. Typically, the time between buying and selling will be very short – sometimes considerably less than one minute. It is, therefore, important to use an FX site where super-fast transactions are possible. Also, you need a reasonably fast computer and a reliable and fast internet connection.
You will need to use a forex broker with a small spread to make money scalping forex.
Long-term investments (positional trading)
If you aren’t willing and able to spend a lot of time on FX trading, long-term investments in currency are usually a better choice than day trading and other types of short-term speculation. You keep a position open for a long time, e.g. several weeks, and don’t fret too much about small swings up and down. What you are interested in is where the price is going in the long term.
Generally speaking, it is best to avoid leverage or, at the very least, refrain from making highly leveraged trades. You are exposing yourself to long-term risks.
This article was last updated on: April 3, 2025