Forex Market in 2025: What Should Beginner Traders Know?

Global Forex trading volume in 2024 averages $7.5 trillion per day, making it one of the most liquid financial markets. For those new to the Forex market, the first questions are Is Forex really profitable? and How should I get started?

What is Forex and Why Do Traders Favor It?

Forex trading involves buying and selling foreign currencies in pairs, such as USD/THB, EUR/USD, or USD/JPY. The first currency (Base Currency) is what we are buying, and the second is what we are selling.

When buying USD/JPY at 160.00, it means using 160 Japanese Yen to purchase 1 US dollar. Prices fluctuate based on the economic strength of each country.

Main advantages of Forex trading:

• High liquidity: Easy to buy and sell at desired prices
• 24-hour trading, 5 days a week (excluding weekends)
• Various currency pairs: Options to trade upward or downward
• Leverage increases profit potential: but also increases risk
• Utilizes both hedging and speculative strategies

What Factors Drive Forex Prices?

Forex prices do not move randomly; several factors influence changes:

Central Bank Policies: When the US raises interest rates, the dollar tends to strengthen. Conversely, if the Bank of Japan maintains low rates, the Yen usually weakens.

Economic Data: Employment figures, inflation rates, trade balances—all impact currency strength.

International Investment Flows: When the economy performs well, capital flows in; political decisions also influence investment directions.

Commodities and Other Markets: Rising oil prices can strengthen the Canadian dollar.

Demand for Safe-Haven Assets: During economic crises, investors often buy dollars or Japanese Yen to preserve value.

3 Main Ways to Trade Forex

( 1. Spot Market Trading )
Simply converting money back and forth. When exchange rates move favorably, you realize profits. However, it requires full capital upfront, has high fees, and is less suitable for short-term trading.

2. Futures Contracts (

Standardized contracts traded on official markets like CME )Chicago###. They offer good liquidity but have fixed contract sizes, making them more suitable for intermediate to advanced investors.

( 3. CFDs )Contracts for Difference###
Profit from price differences without owning the actual asset. Uses leverage, requires less capital, and allows quick opening and closing. Ideal for short-term speculation but also involves high risk.

Which Currency Pairs Are Suitable for Beginners?

( EUR/USD )Euro-Dollar###
Best liquidity, moderate volatility. Suitable for short- and medium-term trading. Most active during European and American market hours.

( USD/JPY )Dollar-Yen###
Popular due to moderate volatility. The Japanese Yen is a “safe-haven asset,” so fluctuations are not too extreme. Moves significantly during Tokyo-New York market overlaps.

( GBP/USD )Pound-Dollar###
Good liquidity but high volatility due to specific UK factors. Requires more experience and attention to news.

Step-by-Step Forex Trading Process

Step 1: Select currency pair and analyze
Consider liquidity, volatility, and activity times. Beginners should start with EUR/USD or USD/JPY.

Step 2: Decide to buy or sell

• Place a Long order (Long) if you think the currency will strengthen
• Place a Short order (Short) if you think it will weaken

Step 3: Set Stop Loss (Stop Loss)
Very important to define the point where you are willing to accept losses to prevent large drawdowns, e.g., limit losses to 2-3% of your capital.

Step 4: Wait for the price to move as planned
Monitor your margin (Margin) to avoid margin calls, and wait for the price to fluctuate as expected.

Step 5: Close the position and realize profit/loss
Close the trade when reaching your profit target or if the price stalls. You may also close part of the position to lock in some gains.

Step 6: Review and improve
Analyze what worked and what didn’t to learn for next time. “Repeat what works,” as Charlie Munger says.

5 Important Reminders for Traders

1. Leverage as a “double-edged sword”
Higher leverage can amplify profits but also increases risks. A wrong calculation can wipe out your capital in one move. Use balanced leverage suitable for your experience.

2. Be prepared for volatility
When central banks meet or release key economic data, prices can swing sharply within minutes. Without a Stop Loss, you risk being forced into large losses.

3. Trade frequently and get exhausted
Small profits from many trades can be offset by careless losses. Trade only when clear setups appear, not out of boredom.

4. Keep up with news
Interest rate decisions, GDP reports, and other key data can cause big price swings. Not knowing “why prices are moving intensely” can lead to anxiety.

5. Greed can be dangerous
Even after making profits, some traders hesitate to close, hoping for more gains. When the market reverses, profits vanish quickly. Set profit targets and stick to them.

Summary: Trading Forex with Rationality

The Forex market offers traders opportunities to learn money management, market analysis, and emotional control. But it’s not an easy way to get rich quickly. If genuinely interested, start with basic education, practice with demo accounts, then gradually increase real trading capital. Patience and discipline are key; profits will follow in due course.