Forex Education

Forex trading means buying one currency and selling another at the same time, with profit or loss coming from changes in the exchange rate between the two currencies. The forex market is an over-the-counter (OTC) market with no single exchange. Trades are matched through a network of quotes from banks, institutions and brokers, and the market runs almost 24 hours a day on weekdays.

Retail traders usually trade through a broker's trading platform (such as MT4 or MT5), and most trade the price movements of currency pairs as contracts for difference (CFDs) without actually exchanging any currency.

Example: if EUR/USD rises from 1.0800 to 1.0850, the buyer makes a profit and the seller makes a loss; if it falls, the opposite is true.

Risk warning: forex and CFDs are leveraged products that carry a high level of risk. You may lose all of your capital, and they are not suitable for all investors.

A currency pair is a quote for the exchange rate between two currencies. Taking EUR/USD as an example, EUR before the slash is the base currency and USD after the slash is the quote currency.

Example: EUR/USD = 1.0800 means that EUR 1 can be exchanged for USD 1.0800.

Buying EUR/USD means buying the base currency and selling the quote currency, and you profit when the price rises; selling EUR/USD is the opposite. A rise in a currency pair's price means that the base currency has appreciated against the quote currency.

This is a common classification based on liquidity and trading activity. There is no single official standard in the industry, and different brokers may classify pairs slightly differently.

Exotic pairs often have wider spreads, sharper volatility and lower liquidity, so their costs and risks need extra attention.

Buy means opening a long position because you expect the price to rise, and it is executed at the Ask price. Sell means opening a short position because you expect the price to fall, and it is executed at the Bid price.

When closing, the direction is reversed: closing a buy position is equivalent to selling and is executed at the Bid; closing a sell position is equivalent to buying and is executed at the Ask.

Example: EUR/USD is quoted at 1.0800 / 1.0802. A buy is then executed at 1.0802, and a sell is executed at 1.0800.

A long position means holding a buy position and profiting when the price rises; a short position means holding a sell position and profiting when the price falls.

You can go short directly in forex and CFDs, because a currency pair is itself a combination of one buy and one sell.

Note that a price has, in theory, no upper limit, so if the price keeps rising while you are short, losses can grow rapidly, which makes risk management especially important.

Example: if you buy EUR/USD at 1.0800 (go long) and the price rises to 1.0850, you make a profit of 50 pips; if you sell at 1.0800 (go short) and the price rises to 1.0850, you make a loss of 50 pips.

Swap values for long and short positions differ; see "What is Swap?".

A bull market is one in which prices are in a sustained uptrend, and a bear market is one in which prices are in a sustained downtrend.

The stock market often defines these as a rise or fall of a certain percentage from a high, but the forex market has no uniform numerical standard and more commonly uses "uptrend" and "downtrend".

Because currencies are always quoted in pairs, a rise in a currency pair means the base currency has strengthened against the quote currency, so when talking about bull and bear markets you should specify which currency pair and which timeframe.

A contract for difference (CFD) is a contract in which a trader and a broker agree to settle profit or loss based on the difference between the opening price and the closing price.

Features of CFDs: the trader usually does not own the underlying asset itself (you do not hold physical spot forex, gold or shares); leverage can be used; you can go long or short; and costs include the spread, commission and swap.

Because the counterparty is usually the broker, it is important to choose a regulated broker with sound client fund management. Some countries and regions restrict CFDs, so please comply with local regulations. CFDs are highly leveraged, and you may lose all of your capital.

The Bid is the price at which the broker is willing to buy from you, which is the price at which you sell. The Ask (also called the offer) is the price at which the broker is willing to sell to you, which is the price at which you buy. The Ask is always higher than the Bid.

Example: EUR/USD is quoted at 1.0800 / 1.0802, so Bid = 1.0800 and Ask = 1.0802. Your buy is executed at 1.0802 and your sell at 1.0800.

In Chinese, the terms for the bid and the ask are named from the broker's point of view, which is easy to confuse. A simple way to remember: the Bid is the price you sell at, and the Ask is the price you buy at.

The spread is the difference between the Ask and the Bid, and it is the most common trading cost.

Formula: Spread = Ask − Bid

Example: Ask 1.0802 − Bid 1.0800 = 0.0002, which is 2 pips.

The moment you open a position, it carries a floating loss of about one spread, and the price has to move in your favour by more than the spread for you to break even. A spread may be fixed or floating: it often widens at market opens, during major news or when liquidity is thin.

Commission is a fee the broker charges per lot traded. Some accounts (commonly ECN and Raw accounts) have lower spreads but charge a commission per lot on top, while other accounts have zero commission with all costs included in the spread.

How commission is charged (per side or round turn) and the amount differ by broker, account type and instrument, so please refer to the broker's latest published rules.

Example (hypothetical figures): commission is USD 6 per lot round turn and you trade 0.5 lot, so the commission cost = 6 × 0.5 = USD 3.

Swap (also called the overnight fee or rollover) is the interest you pay or receive when a position is held past the daily settlement time. It arises from the interest rate differential between the two currencies, plus the broker's markup. Swap values differ for long and short positions, and may be positive (received) or negative (paid).

Example (hypothetical figures): the swap for going long on an instrument is −USD 6.5 per lot per day, you hold 0.5 lot and keep the position for 3 settlement days, so the cost = 6.5 × 0.5 × 3 = USD 9.75.

Most forex instruments charge three days of swap on a particular weekday (commonly Wednesday) to cover the weekend, while CFDs such as gold and indices have their own rules. Check the exact values and settlement times in the contract specifications on the platform, as set by the broker.

The cost of trading is all of the charges involved in making a trade, mainly the spread, commission and swap, plus the extra price difference caused by slippage. Deposit and withdrawal fees and currency conversion fees are account-level costs.

Formula: Cost per trade ≈ spread (pips) × pip value × lots + commission × lots + swap

Example (hypothetical figures): EUR/USD spread of 1.2 pips, pip value of USD 10 per lot, trading 0.5 lot, with commission of USD 7 per lot: spread cost = 1.2 × 10 × 0.5 = USD 6; commission = 7 × 0.5 = USD 3.5; total USD 9.5.

When comparing brokers, compare the total cost rather than the spread alone. You can use the rebate calculator to estimate spread cost, rebate and net cost.

Slippage is the difference between the price you see when placing an order and the price at which it is actually executed. It is most common when prices jump quickly or liquidity is thin, for example after major news releases, at market opens or after a weekend gap, and it mainly affects market orders and stop orders.

Slippage can work against you or in your favour (positive slippage), so it is not always a loss.

Example: you buy EUR/USD at market, the Ask is 1.0802 when you place the order and it is executed at 1.0805, a slippage of 3 pips; if you trade 1 lot (pip value of about USD 10), the extra cost = 3 × 10 = USD 30.

Ways to reduce slippage: avoid periods of high volatility, use limit orders, and choose a broker with good execution quality.

A pip is the standard unit of movement in a forex quote. For most currency pairs, 1 pip = 0.0001 (the 4th decimal place); for yen pairs, 1 pip = 0.01 (the 2nd decimal place).

Example: EUR/USD rising from 1.0800 to 1.0825 is a rise of 25 pips. USD/JPY rising from 150.00 to 150.40 is a rise of 40 pips.

The quote precision and the meaning of "1 pip" for CFD products such as gold, silver and indices are set by the broker's contract specifications and cannot be taken as forex's 0.0001, so check the contract specifications before trading.

A pipette is one tenth of a pip, that is, the last digit in a 5-digit quote (the 3rd decimal place for yen pairs).

Example: EUR/USD is quoted at 1.08025, and the final 5 is the pipette; a move from 1.08020 to 1.08025 is 0.5 pip, not 5 pips.

1 pip = 10 pipettes. The "point" shown on MetaTrader platforms usually refers to the smallest quote unit, which for forex instruments with 5-digit quotes is the pipette, so the number of points on the platform has to be divided by 10 to get pips in the standard sense.

Pip value is the profit or loss amount for each 1-pip move in price on a 1-lot trade.

Formula: Pip value = price change of 1 pip × contract size (units of the base currency), converted to the account currency.

Example 1: EUR/USD, 1 standard lot = EUR 100,000, USD account: 0.0001 × 100,000 = USD 10 per pip. 0.1 lot = USD 1 per pip, and 0.01 lot = USD 0.1 per pip.

Example 2: USD/JPY, 1 lot: 0.01 × 100,000 = JPY 1,000 per pip; at an exchange rate of 150.00 this converts to about USD 1,000 ÷ 150 = USD 6.67 per pip.

A lot is the unit of trading volume. In forex, 1 standard lot usually corresponds to 100,000 units of the base currency, but the actual contract size is set by the broker's contract specifications.

For CFDs such as gold, silver, crude oil, indices and cryptocurrencies, the meaning of 1 lot differs (for example, 1 lot of gold commonly corresponds to a certain number of ounces), so you must follow the contract specifications on the platform and cannot apply forex's 100,000 directly.

Example: buying 1 lot of EUR/USD is equivalent to buying EUR 100,000, with a notional value of about 100,000 × 1.0800 = USD 108,000.

In forex, the common lot conversions are as follows (with 100,000 as the contract size of 1 standard lot):

The minimum lot size and the lot step you can actually trade differ by broker and account type, so please refer to the platform's description. Beginners are advised to start with smaller lot sizes.

Formula: Profit/loss ≈ price change (pips) × pip value × lots. More precisely: profit/loss on a buy = (closing price − opening price) × contract size × lots; profit/loss on a sell = (opening price − closing price) × contract size × lots. The result is in the quote currency, which is then converted to the account currency, and finally the spread, commission and swap are deducted.

Example 1: buy 1 lot of EUR/USD, opened at 1.0800 and closed at 1.0850: (1.0850 − 1.0800) × 100,000 = USD 500.

Example 2: sell 0.5 lot of USD/JPY, opened at 150.00 and closed at 149.50: (150.00 − 149.50) × 100,000 × 0.5 = JPY 25,000, which converts at 149.50 to about USD 167.22.

Example 3 (gold, assuming a contract specification of 1 lot = 100 ounces): buy 0.1 lot, opened at 3,300.00 and closed at 3,310.00: (3,310 − 3,300) × 100 × 0.1 = USD 100. The contract size for CFDs such as gold is as set in the platform's contract specifications.

The calculations are for illustration only and do not include the spread, commission and swap.

Pip value depends on three factors: how large a price move 1 pip represents, the contract size, and whether the quote currency is the same as the account currency.

When the quote currency is the account currency (for example trading EUR/USD with a USD account), the pip value is fixed at USD 10 per lot. When the quote currency is not the account currency (for example USD/JPY or EUR/GBP), it has to be converted at the prevailing exchange rate, so the pip value changes with the exchange rate.

Example: EUR/GBP, 1 pip = GBP 0.0001, 1 lot = GBP 10; if GBP/USD = 1.2700, the pip value ≈ 10 × 1.27 = USD 12.7.

In addition, 1 pip for yen pairs is 0.01, and the pip value for instruments such as gold is set by the contract specifications. The figures use example exchange rates, and the actual values are as shown on the platform.

Leverage is a mechanism that lets you control a position with a larger notional value using less margin. Leverage of 1:100 means that USD 1,000 of margin can control up to about USD 100,000 of notional value.

Leverage magnifies the size of the position and the effect of profit and loss on the account, and it does not change the market price itself. Maximum leverage differs by broker, regulatory region, instrument and account type, and some regions set leverage caps for retail clients, so please refer to the broker's latest rules.

Formula: Theoretical maximum notional value ≈ margin × leverage.

Example: with USD 1,000 in the account and leverage of 1:100, you can in theory hold up to about USD 100,000 of notional value. The positions you can actually open also depend on the margin rules for the instrument, the margin already in use and the buffer you keep in reserve, and you should not open positions up to the limit.

Leverage itself does not increase profit or loss; what determines their size is the position you actually open. The higher the leverage, the easier it is for the same funds to open a larger position, and the same price move then causes a profit or loss that is a larger share of the account.

Example: a USD 5,000 account and a 50-pip adverse move in EUR/USD. 0.1 lot: loss = 50 × 1 = USD 50, or 1% of the account. 1 lot: loss = 50 × 10 = USD 500, or 10% of the account.

So the risk comes from the lot size rather than the leverage figure. We suggest deciding first on the loss you can bear and then working back to the lot size.

Margin is the collateral set aside when a position is opened, like a "deposit". It is not a trading fee and it is not the same as the maximum loss; the margin in use is released after the position is closed.

Formula: Margin = notional value ÷ leverage

Example: buy 0.5 lot of EUR/USD at a price of 1.0800 with leverage of 1:100: notional value = 0.5 × 100,000 × 1.0800 = USD 54,000; margin = 54,000 ÷ 100 = USD 540.

The way margin is calculated may differ for different instruments (such as gold, indices and cryptocurrencies), as set out in the platform's contract specifications.

The margin level is an indicator of how safe an account is.

Formula: Margin level = equity ÷ margin used × 100%, where equity = balance + floating profit/loss, and free margin = equity − margin used.

Example: balance USD 1,000, floating loss on open positions USD 100, margin used USD 300: equity = USD 900; margin level = 900 ÷ 300 = 300%; free margin = 900 − 300 = USD 600.

The lower the margin level, the closer you are to a margin call or a stop out. The specific warning levels are set by the broker.

A margin call is a notice sent when the margin level falls to the warning level set by the broker, reminding you to add funds or reduce positions so as to avoid reaching a stop out.

The warning level differs by broker (for example, some set it at 100%), and brokers also handle it differently: some only send a warning, while others restrict opening new positions.

A margin call is not a stop out: it is a warning, and a stop out is when the system closes positions automatically. After receiving a notice, you can add funds, close some positions or set stop-losses to reduce risk.

A stop out is a mechanism by which the system automatically closes some or all of your positions when the margin level falls to the stop out level set by the broker, usually starting with the position with the largest loss, until the margin level is back above the stop out level.

The stop out level differs by broker and account type. Example (assuming a stop out level of 50%): with margin used of USD 400, a stop out is triggered when equity falls to USD 200.

Note that when the market gaps quickly (for example on major news or at the weekend open), the execution price may be worse than the price corresponding to the stop out level, and the loss may exceed the account balance. Whether negative balance protection is offered depends on the broker and the regulatory region, and not every broker has it, so please read the client agreement before opening an account.

No. High leverage reduces the margin needed to open a position and lets the account open a larger position, but it also makes the account more likely to lose money quickly in an adverse move and makes overtrading more likely.

Example: with a USD 1,000 account and leverage of 1:500, you could in theory open about 4.6 lots of EUR/USD (1,000 × 500 ÷ 108,000). An adverse move of about 22 pips would then lose ≈ 4.6 × 22 × 10 ≈ USD 1,012, wiping out the account; for the same move, 0.1 lot would lose only about USD 22. In practice, the margin used by 4.6 lots is already close to the whole of the account's equity, so the margin level would reach the warning level, or even the stop out level, before the account was wiped out, and the positions might already have been closed by the system.

What really controls risk is the percentage risked per trade, the stop-loss and the lot size, not the leverage cap. The higher the leverage, the more strictly you need to manage position size.

Money management is the method of planning how account funds are used. Its aim is to preserve capital in adverse markets and stay in the market for the long term, rather than to profit on every trade.

Common elements include:

1. The maximum risk per trade (a common rule of thumb is 1%–2% of equity, which is not a recommendation).

2. The total risk of open positions, avoiding heavy positions in several correlated currency pairs in the same direction.

3. A rule to pause trading once the account has lost a certain amount.

4. Margin reserve, keeping the margin level high as a buffer.

5. Planning deposits and withdrawals, using only funds you can afford to lose.

Example: with a USD 5,000 account and a rule of 1% risk per trade, you lose at most about USD 50 per trade; even after 5 consecutive losses, the account would still have about USD 4,755 (5,000 × 0.99⁵), keeping most of the capital.

The above is general information and does not constitute investment advice.

Position sizing is the method of deciding the lot size for each trade. The core idea is to decide first how much you are willing to lose and then work back to the lot size.

Formula: Lots = amount you are willing to lose ÷ (stop-loss pips × pip value per lot)

Example: a USD 5,000 account with 1% risk per trade = USD 50; EUR/USD stop-loss of 25 pips and pip value of USD 10 per lot: lots = 50 ÷ (25 × 10) = 0.2 lot.

After calculating, round down to the platform's lot step, and consider the effect of the spread on the actual loss.

A stop-loss is a closing price set in advance. When the price reaches that level in the adverse direction, the position is closed automatically to limit the loss.

The stop-loss for a buy position is placed below the opening price, and for a sell position above it. Once triggered, it is usually executed at the market price, and in a gap or fast market the actual execution price may be worse than the stop-loss price, so it is not an absolute cap on loss (unless the broker offers a "guaranteed stop-loss" type of product under separate terms).

Example: buy 0.2 lot of EUR/USD at 1.0800 with a stop-loss at 1.0775 (25 pips): expected loss = 25 × 10 × 0.2 = USD 50, before the spread and slippage.

Take-profit is a closing price for taking profit that is set in advance. When the price reaches it, the position is closed automatically, locking in the profit and avoiding missing the target or being swayed by emotion.

The take-profit for a buy position is placed above the opening price, and for a sell position below it. Only a sensible pairing of take-profit and stop-loss gives a clear risk-to-reward ratio.

Example: buy 0.2 lot of EUR/USD at 1.0800 with a take-profit at 1.0850 (50 pips): expected profit = 50 × 10 × 0.2 = USD 100, before costs.

Tip: a buy position is closed at the Bid price and a sell position at the Ask price, so a price that appears to have been reached on the chart does not necessarily result in execution.

Maximum drawdown is the largest fall in account equity from a peak to the lowest point afterwards, and is used to measure the worst-period loss of a strategy or an account.

Formula: Maximum drawdown = (peak − trough) ÷ peak × 100%

Example: equity rises from USD 10,000 to USD 12,000 and then falls to USD 9,000: drawdown = (12,000 − 9,000) ÷ 12,000 = 25%.

The larger the drawdown, the harder it is to recover: a 25% loss requires a profit of about 33.3% to break even, and a 50% loss requires a 100% profit.

A blown account usually means the account's margin is insufficient and positions are closed by force, causing equity to shrink sharply or even fall close to zero.

Common causes: lot sizes that are too large, excessive use of leverage, not setting stop-losses, adding to losing positions to average down, and major news or gap moves.

Ways to reduce the risk: control lot size and keep the margin level high as a buffer; set a stop-loss on every trade; avoid heavy positions around major data releases; and watch for weekend gaps. In extreme markets, losses can exceed the account balance, and whether negative balance protection applies depends on the broker.

There is no standard answer that suits everyone. A common starting reference is to keep the risk on each trade within 1%–2% of account equity, which is a general rule of thumb and not a recommendation.

Example: a USD 2,000 account with 1% risk per trade = USD 20; stop-loss of 40 pips and EUR/USD pip value of USD 10 per lot: lots = 20 ÷ (40 × 10) = 0.05 lot.

The effect of consecutive losses: at 1% risk per trade, after 10 consecutive losses the account is left with about 0.99¹⁰ ≈ 90.4%; at 5% risk per trade, after 10 consecutive losses it is left with about 0.95¹⁰ ≈ 59.9%. The larger the risk per trade, the harder it is to recover after consecutive losses.

The risk-to-reward ratio is the ratio of the potential loss to the potential profit on a single trade, that is, the ratio of the stop-loss distance to the take-profit distance.

Example: a stop-loss of 20 pips and a take-profit of 40 pips give a risk-to-reward ratio of 1:2.

Formula: Win rate needed to break even = 1 ÷ (1 + R), where R = profit ÷ loss (before costs). With R = 2, a win rate of about 33.3% is enough to break even; with R = 1, 50% is needed.

In real trading, the spread, commission and slippage raise the win rate needed; an attractive risk-to-reward ratio does not guarantee profit, which also depends on the actual win rate.

A candlestick (candle) uses one "candle" to show the open, high, low and close of price over one time period. The body shows the range between the open and the close, and the upper and lower wicks show the high and low reached in that period.

Colour conventions differ by software and region: in some, a rise is red and a fall is green, and in others the reverse, so check the platform's settings before use.

Common timeframes include M1 (1 minute), M5, M15, H1 (1 hour), H4, D1 (daily), W1 and MN (monthly). Forex charts are usually drawn from the Bid price.

The open is the first price of the period, the close is the last, and the high and low are the extremes within the period. A close above the open gives a bullish candle (a rise), and a close below the open gives a bearish candle (a fall).

Example: an H1 candle with an open of 1.0800, a high of 1.0830, a low of 1.0790 and a close of 1.0820: the close is above the open, so it is a bullish candle; the body is 20 pips, the upper wick is 10 pips and the lower wick is 10 pips.

A long upper wick means the price pushed higher but was pushed back, and a long lower wick means the price dropped but was pulled back. They need to be judged together with position and trend and cannot be treated as a buy or sell signal on their own.

Technical analysis is a way of analysing where prices may go by studying historical price and volume changes. Common tools include trendlines, support and resistance, moving averages, candlestick patterns and various indicators.

Its basic assumptions are that price already reflects most information, trends tend to continue, and historical patterns tend to repeat.

Limitations of technical analysis: it gives probability-based judgements, not certain predictions, and indicators often lag and produce false signals. Many traders use it together with fundamentals (economic data) and risk management.

A support level is an area where a falling price tends to stop falling and rebound, and a resistance level is an area where a rising price tends to be held back and fall. They usually form because there were large numbers of buy and sell orders in that area before.

Support and resistance are "zones" rather than one exact price. After a valid breakout, former resistance sometimes becomes support, and vice versa; false breakouts also occur.

Example: EUR/USD has rebounded around 1.0700 several times, so the area around 1.0700 can be regarded as a support zone; if the price closes below this area on strong volume, the support may no longer hold.

Trend analysis is judging the general direction of price movement: an uptrend shows highs and lows that are progressively higher, a downtrend shows highs and lows that are progressively lower, and a sideways range is when price moves within a range.

Common tools are trendlines, moving averages (such as 50-period and 200-period) and high/low structure. The common saying "trade with the trend" means trying to trade in the general direction, but a trend can reverse at any time, so you still need a stop-loss.

Example: lows of 1.0700, 1.0740 and 1.0780 in turn and highs of 1.0760, 1.0810 and 1.0850 in turn make an uptrend; once price breaks below the most recent low at 1.0780, the uptrend structure may be broken and needs to be reassessed.

The RSI (Relative Strength Index) oscillates between 0 and 100, with 14 periods commonly used. A reading above 70 is generally seen as overbought and below 30 as oversold, but in a strong trend it can stay in these areas for a long time, so overbought and oversold readings should not be treated directly as reversal signals.

The MACD (Moving Average Convergence Divergence) consists of the MACD line (12-period EMA minus 26-period EMA), the signal line (a 9-period EMA of the MACD line) and a histogram. The MACD line crossing above the signal line is called a bullish crossover and the reverse a bearish crossover, and it is commonly used to observe trend momentum.

Both are lagging indicators calculated from historical prices, their parameters can be adjusted, and their signals need to be confirmed with price structure and other conditions.

Multi-time-frame analysis looks at charts of different timeframes at the same time: use a larger timeframe (such as daily or 4-hour) to judge the general direction and key price levels, then use a smaller timeframe (such as 1-hour or 15-minute) to find entry points and stop-loss levels.

Example: the daily chart is in an uptrend, so you wait for the price to pull back to a support zone on H1 and show signs of stabilising before considering a trade with the trend, with the stop-loss placed below that support.

This reduces the misjudgements that come from looking at a single timeframe. When different timeframes give conflicting signals, you should generally be more cautious or skip the trade.

An economic calendar is a table listing the release times of upcoming economic data and central bank events. It usually includes the country or currency, the event name, the release time, its importance (high, medium or low), the previous value, the forecast and the actual value.

Traders use it to know in advance which periods may see sharp volatility, so that they can adjust position size or avoid risky periods. MT5 has a built-in economic calendar, and other third-party calendars can also be used.

When using one, always confirm the time zone it displays (such as GMT, US Eastern Time or Beijing Time), otherwise it is easy to misread the release time.

Nonfarm Payrolls (NFP) is the number of new jobs added outside the agricultural sector, published by the US Bureau of Labor Statistics (BLS). It is an important gauge of the US labour market and is usually released on the first Friday of each month. The same report also includes the unemployment rate and average hourly earnings.

It is usually released at 8:30 US Eastern Time, which is 20:30 Beijing Time during daylight saving time and 21:30 during standard time. The exact date may be adjusted because of holidays or special circumstances, so please refer to the schedule published by the US Bureau of Labor Statistics.

NFP often causes sharp volatility in the US dollar, gold and US stocks, and spreads may also widen noticeably.

The previous value is the figure published for the prior period (which may be revised); the forecast is the general expectation of market analysts; and the actual value is the result published this time.

What the market pays more attention to is "the gap between the actual value and the forecast", that is, whether it beats expectations, rather than the figure itself.

Example: an NFP forecast of 180,000 new jobs with an actual release of 250,000 is a beat, and the US dollar may strengthen, but this is not certain: the market also looks at revisions to the previous value and other data such as the unemployment rate, and expectations may already be priced in.

High-impact news is an event with a large effect on market prices, usually marked in red or as high importance on an economic calendar. Common examples are central bank interest rate decisions and statements, Nonfarm Payrolls, CPI inflation data, GDP and speeches by central bank officials.

The range of the impact depends on the currencies involved: US data mainly affects the US dollar, currency pairs involving the dollar and gold; eurozone data mainly affects euro pairs.

Example: Federal Reserve rate decisions, US Nonfarm Payrolls and CPI, and rate decisions by the European Central Bank and the Bank of England are all common high-impact events.

Around such events, spreads may widen and prices may gap, so we recommend checking the economic calendar before holding positions; for specific approaches, see "How do I deal with major economic data releases?".

The reason is that liquidity providers and brokers widen their quotes and reduce order book depth to control risk when uncertainty is high, which makes the gap between the Bid and the Ask larger; at the same time, prices may jump, increasing the likelihood of slippage and delays in order execution.

This behaves differently across brokers and account types, and even on fixed-spread accounts there may be cases where orders cannot be filled or are requoted.

Example: a spread that is normally 1 pip widens to 15 pips at the moment of the news, so the spread cost of trading 1 lot rises from about USD 10 to about USD 150.

When the spread widens, the stop-loss on a sell position (triggered at the Ask) may be triggered early.

Market volatility measures the size of price movements. High volatility means prices change more over a short time, and both opportunities and risks increase with it.

A common measure is the Average True Range (ATR). Example: an ATR(14) of 70 pips on the daily chart of EUR/USD means that recently the price has moved about 70 pips a day on average.

When volatility rises, you often need to place the stop-loss wider and reduce lot size in proportion, so that the amount risked on a single trade stays the same. Example: with a risk amount of USD 50, a stop-loss of 25 pips allows 0.2 lot; widening the stop-loss to 50 pips allows only 0.1 lot.

Approaches you can consider:

1. Check the economic calendar in advance and confirm the release time and time zone.

2. Reduce position size or avoid opening new positions before the release, and choose not to trade if necessary.

3. Avoid chasing with market orders at the moment of release, and watch the spread and slippage.

4. Set a sensible stop-loss on open positions and keep a sufficient margin buffer.

5. Wait until volatility settles and spreads return to normal before making a judgement.

No method can guarantee that you avoid losses caused by news-driven markets, so decide according to your own risk tolerance.

A market order is an order that is executed immediately at the current market price: a buy is executed at the Ask and a sell at the Bid.

The advantages are fast execution and, in general, a very high likelihood of being filled; the disadvantage is that the execution price may differ from the price you saw when placing the order (slippage), which is more noticeable in fast markets such as major news or the market open.

Example: EUR/USD is quoted at 1.0800 / 1.0802 and you buy 1 lot at market, so the theoretical execution price is 1.0802; if the price jumps at the moment of the order, the actual execution price may be 1.0804, and the 2-pip difference is slippage.

If you care more about the execution price than about speed, you can consider using a limit order.

A limit order is an order that is executed only at a specified price or better: a buy limit order is executed at the specified price or lower, and a sell limit order at the specified price or higher.

If the price does not reach the specified level, the order is not filled, so it may never be filled. A limit order is placed at a level that is "more favourable" than the current price (buy low, sell high) and is used to wait for a pullback or a bounce.

A stop order becomes a market order and is executed once the price reaches a specified trigger price. A buy stop order is placed above the current price and a sell stop order below it, and they are commonly used to enter on breakouts and also to exit a trade with a stop-loss.

The difference from a limit order: a limit order waits for a more favourable price, while a stop order waits for the price to reach an unfavourable level or a breakout level before executing. Because it is executed at the market price once triggered, the execution price may be worse than the trigger price.

A Buy Limit is a buy pending order placed below the current price, in the expectation that the price will fall to a certain level (such as a support level) and then rebound.

Example: EUR/USD's current Ask is 1.0800 and you place a Buy Limit at 1.0750. When the Ask falls to 1.0750 (or better), the order is executed as a buy.

A Sell Limit is a sell pending order placed above the current price, in the expectation that the price will rise to a certain level (such as a resistance level) and then fall back.

Example: EUR/USD's current Bid is 1.0800 and you place a Sell Limit at 1.0850. When the Bid rises to 1.0850 (or better), the order is executed as a sell.

A Buy Stop is a buy pending order placed above the current price, in the expectation that the price will break upward through a certain level and keep rising, so you buy with the trend.

Example: EUR/USD's current Ask is 1.0800 and you place a Buy Stop at 1.0850. When the Ask touches 1.0850, the order is triggered and buys at the market price, and the execution price may be higher than 1.0850.

A Sell Stop is a sell pending order placed below the current price, in the expectation that the price will break downward through a certain level and keep falling, so you sell with the trend.

Example: EUR/USD's current Bid is 1.0800 and you place a Sell Stop at 1.0750. When the Bid touches 1.0750, the order is triggered and sells at the market price, and the execution price may be lower than 1.0750.

A trailing stop is a stop-loss that moves automatically as the price moves in your favour: as the price keeps moving in your favour, the stop-loss follows it up (for a buy) or down (for a sell), but when the price pulls back the stop-loss does not move back.

Example: you buy at 1.0800 with a trailing distance of 30 pips. When the price rises to 1.0850, the stop-loss moves to 1.0820; when it rises to 1.0900, the stop-loss moves to 1.0870; if the price then falls back, the stop-loss stays at 1.0870 and the position is closed if it is touched.

Note: trailing stops in MT4 and MT5 are usually executed by the terminal program and may not update when the terminal is closed or disconnected, so you also need to set an ordinary server-side stop-loss for protection.

A pending order is an order set in advance that is executed only when the price meets its condition in future. MT4 offers four basic pending orders:

MT5 also has Buy Stop Limit and Sell Stop Limit. Pending orders can be given an expiry. When the market gaps at the weekend, the actual execution price may differ from the pending order price.

MetaTrader 4 (MT4) is a trading platform developed by MetaQuotes, used mainly for forex and CFD trading. It uses the MQL4 language, supports EAs (automated trading programs), custom indicators and a range of charting tools, and is widely used.

MT4 offers 9 timeframes and four types of pending order, and has desktop, web and mobile versions. The instruments, features and servers available depend on the broker you choose.

MetaTrader 5 (MT5) is the next-generation platform from MetaQuotes. It uses the MQL5 language, offers 21 timeframes, adds a built-in economic calendar, market depth and more pending order types, and supports more asset classes (depending on the broker).

EAs for MT5 are not compatible with MT4, and an MT4 EA has to be rewritten in MQL5 before it can be used on MT5.

Which platform to choose depends on your trading habits, the EAs you use and which platform the broker offers for the account, so please refer to the broker's description.

A demo account is an account for practising trading with virtual funds in a market environment close to the real one. It generates no real profit or loss, and is used to get familiar with the platform and test trading ideas.

Limitations: demo trading has none of the psychological pressure that comes with real money; execution and slippage may be better than on a live account; and some brokers' demo accounts have a time limit. Good performance on a demo account does not mean live trading will be equally profitable.

The general steps:

1. Download MT4 or MT5 from the broker's official website, or use the web platform the broker provides.

2. In the platform, click File and choose "Open an Account".

3. In the server list, choose the server for the broker.

4. Enter your name and email, and choose the account type, leverage and initial virtual funds.

5. After submitting, you receive a login number and password and can log in to practise.

Some brokers also let you open a demo account directly in the client portal, with the specific steps as set by the broker. For the live account opening process, see the account opening guide.

The forex market is an over-the-counter market that trades continuously for almost 24 hours on weekdays and is closed at weekends. The market roughly opens at 5 pm New York time on Sunday (the Sydney session) and closes at 5 pm New York time on Friday.

Converted to Beijing time: during New York daylight saving time (US Eastern Time UTC−4), it opens at around 5:00 am on Monday and closes at around 5:00 am on Saturday; during standard time (UTC−5), it is around 6:00 am on Monday and Saturday respectively.

A broker's actual trading hours, holiday arrangements and platform server time (commonly GMT+2 or GMT+3, adjusted with US daylight saving time) all differ, so please refer to the broker's contract specifications.

Forex trading is divided into three sessions according to the business hours of the main financial centres. The table below gives approximate times, which shift with daylight saving time:

Beijing time has no daylight saving time and is equal to GMT+8. The sessions overlap, and the times published by different brokers differ slightly.

Generally, liquidity is highest during the overlap of the London and New York sessions: about 13:00–17:00 GMT (winter time) or 12:00–16:00 GMT (summer time), which corresponds to about 21:00–01:00 next day Beijing time (winter time) or 20:00–00:00 next day (summer time), when pairs such as EUR/USD and GBP/USD trade most actively.

During the Asian session, yen and Australian dollar pairs are relatively active; spreads often widen before the Friday close and at the Sunday open; and volatility is greatest around major economic data releases.

"Active" does not mean "easy to profit from", and risk is also higher when volatility is high.

A forex broker is a financial institution that provides clients with a trading platform, quotes, order execution and margin account services. A retail forex broker's income comes mainly from spreads, commission and swap.

By business model, brokers are roughly divided into market makers (where the broker is the counterparty) and straight-through processing (STP/ECN, which passes orders to liquidity providers), each with its pros and cons, and some brokers use a hybrid.

A broker should hold a licence issued by the regulator where it is based, so before opening an account, please check the entity name and licence number on the regulator's official website.

You can look at the following aspects:

1. Regulation: check which regulator supervises the entity serving your region and whether the licence number is valid. The same brand may be served by different entities in different countries, with different protections.

2. Fund safety: whether client funds are segregated and whether there are terms such as negative balance protection.

3. Trading costs: spreads, commission and swap; compare the total cost.

4. Platform and products: whether MT4 or MT5 is available and whether the range of instruments is complete.

5. Deposits and withdrawals: methods, speed and fees.

6. Service and reputation: customer support responsiveness and how complaints are handled.

Do not look only at the rebate amount. For this site's broker profiles, see Brokers, and please rely on the broker's official website and client agreement for all information.

An IB (Introducing Broker) is an individual or institution that works with a broker and refers clients to it, and receives a commission or share from the broker based on the trading volume of the referred clients.

An IB is not a broker, does not hold client funds and is not responsible for executing orders. Client fund safety, order execution and account rules are the broker's responsibility.

A rebate website is usually a platform that works with brokers as an IB and returns part of that share to clients. An IB cannot guarantee that clients will profit and should not promise guaranteed returns; the terms of cooperation are as set by each broker's actual policy. For the brokers this site works with, see Broker profiles.

A forex rebate is when an IB or a rebate website returns part of the share it receives from a broker to the client as agreed. It usually takes the form of a fixed amount returned per lot traded (for example a number of US dollars per lot), and it can also be a certain percentage of the spread.

A rebate can offset part of your trading costs, but it is not a guarantee of profit and cannot offset losses. The rebate amount, settlement cycle and eligible account types are as set by the relevant broker's actual cooperation policy.

Example (hypothetical figures): you trade 1 lot of gold with an agreed rebate of USD 7 per lot, so the rebate on that trade is USD 7, counted on effective closed lots. You can estimate it with the rebate calculator.

The general process:

1. The client registers a broker account through the IB's dedicated link.

2. The account is linked to that IB.

3. The client's trading generates volume.

4. The broker pays commission to the IB under the cooperation agreement.

5. The IB returns part of it to the client as agreed, with the method and cycle of payment (for example daily, weekly or monthly) depending on the specific policy.

Rebates are usually calculated only on closed trades that meet the rules, and some brokers exclude behaviour such as positions held for too short a time or hedged volume churning. The specific rules are as set by the actual cooperation policy.

It can offset part of your costs, but it does not eliminate them and still less does it reduce market risk.

Formula: Net cost = spread cost + commission − rebate

Example (hypothetical figures): the spread cost of 1 lot of an instrument is USD 30, commission is 0 and the rebate is USD 7 per lot, so net cost = 30 − 7 = USD 23.

A rebate does not turn a losing trade into a profitable one, and you cannot ignore other charges such as the spread and commission. You can estimate net cost with the rebate calculator, and the results are estimates only.

Put simply, commission is your expense and a rebate is your income, and neither replaces the other.

Account names and rules vary by broker. The following are the general differences commonly seen:

Example (hypothetical figures): Standard EUR/USD spread of 1.2 pips with no commission, so the cost of 1 lot = 1.2 × 10 = USD 12; ECN spread of 0.2 pip with commission of USD 6 per lot, so the cost of 1 lot = 0.2 × 10 + 6 = USD 8.

Actual costs have to be calculated using the broker's current spreads and commission. For account details of each broker, see Brokers.

There are two common methods:

Formula 1 (fixed per lot): Rebate = lots × rebate per lot

Example: trade 2.5 lots of gold with a rebate of USD 7 per lot: 2.5 × 7 = USD 17.5.

Formula 2 (percentage of the spread): Rebate = spread cost × lots × rebate percentage

Example: an instrument with a spread cost of USD 20 per lot, a rebate percentage of 40% and a trade of 3 lots: 20 × 3 × 40% = USD 24.

Rebate standards differ by instrument and account type, and what is counted is effective closed lots, with the specifics as set by the actual cooperation policy. You can estimate with the rebate calculator.

The spreads, commission, leverage, deposits and withdrawals and regulatory protection of the account itself are usually determined by the broker's rules and have nothing to do with whether you register through an IB; the difference is that registering through an IB may give you a rebate and the related services.

Please note:

1. You need to register using the IB's dedicated link for the account to be linked, and an existing account generally cannot be linked afterwards, subject to the broker's rules.

2. Some brokers have special rules on promotions or conditions for IB accounts, so confirm before opening an account.

3. The rebate amount and the settlement method are as set by the actual cooperation policy.

For the steps to open an account, see the account opening guide. Do not choose a broker only because of the rebate; first confirm whether the regulation, costs and service suit you.