Forex Trading Basics

Currency Pairs Explained

Currencies trade in pairs. GBP/USD means you are buying pounds and selling dollars. The first currency is the “base” and the second is the “quote”. If GBP/USD = 1.2700, one pound buys $1.27.

Pips, Lots, and Leverage

• •Pip — the smallest price movement, usually 0.0001. A move from 1.2700 to 1.2701 = 1 pip.
• •Lot — standard lot = 100,000 units. Mini = 10,000. Micro = 1,000. Beginners should use micro lots.
• •Leverage — FCA-regulated brokers offer up to 30:1 on major pairs. £1,000 controls £30,000. Amplifies gains AND losses.
• •Spread — difference between bid and ask price. This is the broker's fee. Major pairs have tight spreads (0.1–1 pip).

Getting Started Safely

• 1.Only use FCA-regulated brokers (IG, CMC Markets, Pepperstone UK, OANDA).
• 2.Trade on a demo account for at least 3 months before risking real money.
• 3.Never risk more than 1–2% of your account on a single trade.
• 4.Always use a stop loss. No exceptions.
• 5.Stick to major pairs when learning. Exotic pairs will eat you alive with spreads.