March 31, 2026 – OneRoyal Academy

Forex Trading eBook for Beginners

What is Forex? Forex, also known as foreign exchange or FX, is the global financial market where people buy and sell currencies. It’s the place where one currency is exchanged for another, and where traders aim to profit from changes in exchange rates. Why Do People Trade Currencies? Currencies are constantly changing in value. If you believe one currency will become stronger against another, and you are correct, you can make a profit from that price movement. You’ve Already Engaged in Forex Without Knowing it Most people have participated in Forex at least once. Imagine travelling to another country. At the airport, you exchange your local money for the currency of the country you’re visiting. That simple conversion is a Forex exchange. The Forex market you’ll trade in works in the same way, just on a much larger scale. Buying & Selling in Forex When you trade Forex, you are buying one currency and selling another simultaneously. Example You have 1,000 EUR and you want to exchange it to USD. You sell EUR → Which is the base currency in the EUR/USD pair. You receive USD → Which is the quote currency. That’s essentially what forex trading is, exchanging one currency for another online with rapidly changing prices. Currency Pairs A currency pair always contains two currencies. An example is EUR/USD (Euro & U.S. Dollar): The first currency (EUR) in the pair is called the base currency. The second currency (USD) is called the quote currency (also known as the counter currency). Another example is AUD/USD: AUD (Australian Dollar) = Base currency USD (U.S. Dollar) = Quote currency How Currency Symbols Work Currency symbols are comprised of three letters, based on international standards (ISO 4217): The first two letters usually identify the country or region. The third letter usually represents the currency’s name. Example: USD = United States Dollar “US” = United States “D” = Dollar Why This Matters Understanding which currency is the base and which is the quote helps you know what you’re buying and what you’re selling in every trade. Buying & Selling Currency Pairs Forex trading involves buying one currency and selling another at the same time. Currencies are typically traded by retail clients through a forex broker or CFD provider, and they are always traded in pairs. This means the value of one currency is shown relative to another. Example currency pairs: EUR/USD (Euro vs U.S. Dollar) GBP/JPY (British Pound vs Japanese Yen) A Simple Way to Think About it Imagine that each currency pair is in a constant “tug of war”. Each currency pulls in its own direction. If one currency becomes stronger, the exchange rate moves in its favour. If it becomes weaker, the exchange rate moves the other way. An exchange rate is simply the price of one currency compared to another. Why Exchange Rates Change Exchange rates change for many reasons, as currencies become stronger or weaker. These can include economic news, interest rates, and market demand. Types of Currency Pairs Currency pairs are commonly grouped into three main categories: Majors, Minors & Exotics. Major Currencies Many new forex traders start by trading the major currencies. They’re called “majors” because they’re among the most traded currency pairs globally and are associated with some of the world’s largest economies. Major currency pairs have a few common characteristics: They usually have relatively lower spreads They tend to offer higher liquidity (making them easier to buy and sell) They all include the U.S. Dollar (USD) On the right, you’ll find each major currency pair listed with its currency codes, the countries they belong to, their full names, and even their trading nicknames. Minors & Exotics Minors Minors are highly traded currency pairs that don’t include the U.S. Dollar. They share a few common characteristics: Wider spreads compared to Majors Higher volatility Lower liquidity This means Minor pairs can move less predictably and may cost slightly more to trade. Exotics Exotic pairs include one Major currency (USD, EUR, GBP, JPY, AUD, NZD, CHF, CAD) and a currency from a smaller or developing economy. Examples include currencies from Mexico, South Africa, Turkey, or Singapore. Exotics pairs are generally characterised by: Lower liquidity Higher volatility Wider spreads Higher overall trading risk Because they are less liquid, their prices can move sharply, and wider spreads can increase trading costs. As a result, Exotic pairs are generally considered more complex and higher risk, particularly for less experienced traders. Exchange Rates Now that we know what a currency pair is, let’s move on to something even more important: exchange rates. Let’s say the exchange rate of EUR/USD is 1.10501. What does this really mean? It simply means that to buy €1, you need $1.10501. In other words: €1 = $1.10501 Similarly, if you wanted to own €100, you would need: €100 × 1.10501 = $110.501 Bid & Ask Price Remember, trades are expressed in terms of the base currency. You either buy or sell the base currency against the quote currency. Because of this, two prices are always shown: Ask Price → the price to buy the base currency Bid Price → the price to sell the base currency This bid–ask structure is how currency prices are quoted in the Forex market. Example Which price would you use to buy EUR/USD? Bid: 1.10400 Ask: 1.10415 If you said the Ask Price, you’re absolutely right! Let’s try another example: Which price would you use to sell EUR/GBP? Bid: 1.25000 Ask: 1.25017 You would use the Bid Price, of course! What is the Spread? The spread is the difference between the bid price and the ask price. It is also called the bid/ask spread. Spreads are usually measured in pips. For most currency pairs, 1 pip = 0.0001. Let’s look at an example: If EUR/USD is quoted as 1.1051 / 1.1053, the spread is: 1.1053 − 1.1051 = 0.0002 = 2 pips What is a pip? A pip is the standard unit used to measure the change in value between two currencies. For example, if EUR/USD moves from 1.1644 to 1.1645, that increase of 0.0001 is one pip. Most currency pairs are quoted to 4 decimal places. Japanese yen pairs are quoted to 2 decimal places. For EUR/USD, 1 pip = 0.0001 For USD/JPY, 1 pip = 0.01 Calculating Pips Let’s look at some examples using the standard lot size of 100,000 units. Because pips represent very small price movements, the monetary impact of a pip depends on trade size. Each currency pair has a different pip value, so it’s important to calculate the value of one pip for each pair. To keep things simple, we will convert everything into U.S. Dollars. For most major pairs, 1 pip = $10 when trading 1 standard lot (100,000 units). Example 1 (EUR/USD) Open position: Buy 1 lot (100,000) EUR/USD at 1.29530 Close position: Sell 1 lot (100,000) EUR/USD at 1.29930 Calculation: 1.29930 − 1.29530 = 40 pips Profit: 40 pips × $10 = $400 Example 2 (GBP/USD) Open position: Buy 5 lots (500,000) GBP/USD at 1.52270 Close position: Sell 5 lots (500,000) GBP/USD at 1.52990 Calculation: 1.52990 − 1.52270 = 72 pips Since 1 pip = $10 for 1 lot, for 5 lots, 1 pip = $50. Profit: 72 pips × $50 = $3,600 Let’s now calculate the value of a pip when USD is the base currency (the first currency in the pair). For pairs like USD/JPY, one pip is 0.01 because yen pairs are quoted to two decimal places. To find the pip value, we divide the pip size by the exchange rate and multiply by the trade size. Example: USD/JPY at an exchange rate of 97.503 Formula: “Pip Value”=(0.01/97.503)×100,000=$10.26″ per pip” Trade Example You buy 1 lot ($100,000) of USD/JPY at 97.503. A few hours later, the price moves to 99.424, and you decide to close the trade. Your new quote is: 99.424 / 99.450 Because you originally bought to enter the trade, you must sell to close it. So your closing price is 99.424. Pip Difference 99.424-97.503=1.921″ or ” 192.1″ pips” Profit Calculation Now we calculate the pip value at the closing price (more accurate): (0.01/99.424)×100,000=$10.06″ per pip” Then: 192.1″ pips”×$10.06=$1,932.53 What are Swaps? Swap (also known as rollover) is the interest adjustment applied for holding a forex position overnight. Each currency has an interest rate associated with it. Because forex is traded in pairs, every trade involves not only two different currencies, but also their two different interest rates. If the interest rate of the currency you buy is higher than that of the currency you sell, you may receive a positive swap (also known as positive rollover). If the interest rate on the currency you buy is lower than that of the currency you sell, you may receive a negative swap (also known as negative rollover). Swap values are calculated automatically by the trading platform and are reflected in your account history. Swap Calculation Swap = Number of Nights × Swap Rate (buy or sell) × Number of Lots × Point Value Point Value: Contract size × Value of smallest price movement (pip) Example You buy 1 lot EURUSD and hold the position for 1 night. The swap rate for long positions is –3 points. Swap = 1 × -3 × 1 × $10 = –$30 Note: Trades left open on Wednesday night will receive a triple swap charge. When to Buy or Sell a Currency Pair Forex trading involves assessing how one currency may move relative to another. To understand how traders analyse potential price movements, the following example uses basic fundamental analysis for educational purposes only. Example 1 (EUR/USD) In this pair, EUR is the base currency, and USD is the quote currency. When to BUY EUR/USD If economic conditions suggest that the U.S. economy may weaken, this can place downward pressure on the dollar. This means the euro may strengthen relative to the dollar. In such a scenario, some traders may consider a buy position on EUR/USD, reflecting the expectation that the euro could rise against the U.S. dollar. This means buying euros while selling U.S. dollars. When to Buy or Sell a Currency Pair Example 2 (USD/JPY) In this currency pair, USD is the base currency, and the JPY is the quote currency. This means price movements reflect changes in the value of the U.S. dollar relative to the Japanese yen. When to BUY USD/JPY If economic or policy developments suggest that Japanese authorities may allow the yen to weaken (for example, to support exports), this could place downward pressure on the yen. This means the dollar may strengthen relative to the yen. In such a scenario, some traders may consider a buy position on USD/JPY, reflecting the view that the U.S. dollar could rise against the yen. When to SELL USD/JPY If economic or market developments suggest that Japanese investors are moving funds back into Japan, converting U.S. dollars into yen, this could increase demand for JPY. This means the yen may strengthen relative to the dollar. In such a scenario, some traders may consider a sell position on USD/JPY, reflecting the view that the U.S. dollar could fall against the Japanese yen. Bullish vs Bearish Being bullish means you expect prices to rise from where they currently are. Being bearish means you expect prices to fall from their current levels. Bullish Traders Bullish traders typically look to take long (buy) positions. They aim to benefit if prices rise. Bearish Traders Bearish traders typically look to take short (sell) positions. They aim to benefit if the prices fall. What are Lots? Forex is traded in specific amounts called lots. A lot represents the number of units of base currency that you buy or sell in a trade. When you place an order on a trading platform, you choose the lot size, which tells the system how big your position is. An Easy Way to Understand Lots Just like eggs are sold in dozens instead of individually, currencies in forex are traded in fixed amounts, known as lots. Rather than trading very small individual currency units, trade sizes are commonly expressed in standard volumes, such as: 0.01 lot = 1,000 units (micro lot) 0.10 lot = 10,000 units (mini lot) 1.00 lot = 100,000 units (standard lot) Using standard lot sizes makes it easier to calculate pip value, position size, and risk exposure. What is Leverage? Leverage allows a trader to gain exposure to a larger position while committing a smaller amount of capital. While leverage can increase the size of potential gains, it also magnifies potential losses, which can exceed the initial investment. Leverage represents the ratio between the trader’s own funds and the total position size made available by the broker under margin trading conditions. It is not a traditional loan, but a trading mechanism subject to margin requirements. Your leverage ratio (for example 1:100) tells you how much buying power you have relative to your own investment. Example If you have $500 in your account and you use 1:100 leverage, you can control a position worth: $500×100=$50,000 Because leverage increases exposure, both gains and losses are magnified, making risk management essential. What is Margin? Leverage allows you to open larger trades using a smaller amount of your own money. Your deposit is used as margin, which is the amount required to support a leveraged position. Margin is the minimum amount of money you must have in your account to open and maintain a leveraged trade. It helps ensure that potential losses can be covered if the market moves against the position. Margin Requirements If a broker offers leverage of 1:200, the margin requirement is: “Margin Requirement”=1/200=0.5% This means you only need 0.5% of the total trade size in your account to open the position. Example If you want to trade a $100,000 position: $100,000÷200=$500 So, you must have $500 in your trading account as margin in order to open the trade. Margin & Leverage Table The table below shows how much margin you need to trade a $100,000 position using different levels of leverage. Risk Reminder Leverage can increase both potential profits and potential losses. If the market moves against you, losses are magnified compared to a trade without leverage. This makes managing risk essential. What is Equity? Equity is the total value of your trading account. If you have no open trades: Your Equity = Your Balance If you have open trades: Your Equity = Your Balance ± Floating Profit/Loss (P/L) Equity changes constantly alongside the value of your open positions. What is Free Margin? Free Margin is the amount of money in your account that is available to open new trades. To calculate Free Margin: “Free Margin”=”Equity”-“Margin Used” This means Free Margin is what remains after subtracting the margin required for your open positions. What is a Margin Call? In forex trading, a Margin Call happens when your Margin Level falls to a specific threshold set by your broker. When your Margin Level reaches this threshold, it means your account does not have enough Free Margin to support open positions. At this stage, you are at risk of having some or all of your trades closed automatically (“liquidated”), to prevent further losses. At OneRoyal, if your Margin Level falls to 100% or lower, a Margin Call will occur. This means: “Margin Level”=”Equity” /”Margin Used” ×100≤100% At 100%, your Equity = Margin Used, so there is no Free Margin left. Margin Call Explained Here is a typical example: You have an account balance of $5,000 and you open a position worth $500,000 on USD/JPY. With 1:200 leverage, the minimum margin required is: $500,000×0.5%=$2,500″or” $500,000÷200=$2,500 If the USD/JPY price moves against you, your open loss will reduce your Equity. When your Equity falls from $5,000 down to $2,500, your Margin Level reaches 100%, at which point a Margin Call is triggered in accordance with the Company’s trading conditions. When a Margin Call happens, you may take one or more of the following actions: Add funds to your account This will increase your Equity and rises your Margin Level. Close some of your open trades This frees up margin and reduces your exposure. Hedge your position Opening a trade in the opposite direction to manage risk. Hedging does not remove the risk of losses and may involve extra costs. Important Note If you take no action, and your Margin Level falls to 20%, the platform will automatically start closing your positions. This is called a Stop Out. What is a Stop Out? A stop out is when your trades get closed automatically by the system because your account Equity is no longer sufficient to maintain the required margin. This happens when the account has generated losses and there are no more funds available to keep the margin at a safe level. The system will close larger volume trades that are taking up the most margin (even if those are winning trades) first. This happens when the margin percentage reaches 20%. Remember: Margin Level = (Equity ÷ Margin) × 100% Order Types in Trading What are Order Types? Order types are instructions you give the trading platform that tell it how and when to open or close a trade. Using the right order type helps you: Enter the market at the price you want Control risk Avoid unexpected executions Common Order Types Market Order: Opens a trade immediately at the current market price Limit Order: buy lower/sell higher than the current price. Used when you expect price to pull back first Stop Order: buy higher/sell lower than the current price. Used when you expect price to continue in the same direction after a breakout Take Profit (TP): Automatically closes your trade at a pre-defined profit level. Helps you lock in gains without watching the market Stop Loss (SL): Automatically closes your trade to limit losses. A key risk-management tool Market Orders A Market Order opens immediately at the best available market price. It is used when you want to enter a trade right now. For example: Buy = executes at current Ask price Sell = executes at current Bid price Note: Market Orders may be executed at a different price than requested due to slippage, particularly during fast or volatile market conditions. Stop & Limit Orders A Stop Order is an instruction to open a trade only when the market price reaches or passes a specified level. A Buy Stop order is entered at a stop price above the current market price. You would use this to limit losses or protect profits from short positions. A Sell Stop order is entered at a stop price below the current market price. You would use this when expecting the price to continue moving in the same direction. A Limit Order opens at a better price than the current market price. A Buy Limit is when you place the order below the market price to enter long because you believe the price will bounce back at your entry point A Sell limit is when you place the order above the market price to enter short because you believe the price will go back down at your entry point. Take Profit & Stop Loss A Take Profit order is a standing order used to maximise potential profits. You set a specific price above your purchase price. If the market reaches that level, the Take Profit will automatically trigger and close your trade. If the price does not reach that limit, the order is not acted on. A Take Profit helps you lock in your profit automatically, so you don’t need to watch the chart all the time A Stop Loss order helps you limit how much you can lose on a trade. If the market reaches the price you set, your trade closes automatically. Example A trader buys EUR/USD at 1.2750 and places a Stop Loss at 1.2700.If the price drops to 1.2700, the trade will automatically close. A Stop Loss protects your money by closing a bad trade and preventing further losses. Risk Management Risk management helps protect your trading account. Good traders focus on securing capital, not just making profit. Why It’s Important Poor risk management can lead to: Margin calls Stop outs Large emotional losses Blown accounts Good risk management keeps you in the game long enough to learn. An Introduction to Candlestick Charts Charts show how prices move over time. Traders use charts to understand trends, spot entry and exit points, and make informed trading decisions. They help visualise whether the market is going up, down, or moving sideways. Candlesticks display four key price points: Opening price: Where the price started at the beginning of the period Closing price: Where the price ended Highest price: The highest point reached Lowest price: The lowest point reached Candlestick charts are the most commonly used, because they are easy to read and give traders a lot of information at a glance. They help traders identify market direction, buying vs. selling pressure, and potential trend reversals. Other Chart Types Line Charts A line chart connects only the closing prices of each period. It is the simplest type of chart and is great for beginners because: It shows the overall direction clearly It filters out market noise It makes it easy to recognise trends However, it does not show the open, high, or low prices. Bar Charts A bar chart provides more detail than a line chart but is less visual than a candlestick chart. Bar charts help traders see price volatility and daily price ranges without the colours used in candlesticks. Support & Resistance Support is a price level where the market tends to stop falling and bounces back up. It represents buyers becoming active because they believe the price is low or “good value”. When price reaches support, it often slows down, pauses, or reverses upward. Resistance is a price level where the market tends to stop rising. It is an area where sellers become active because they believe the price is too high. When price reaches resistance, it often pulls back, stalls, or reverses downward. Support and resistance levels act like barriers that price struggles to break. They help traders identify: Possible entry points Areas to set Stop Loss and Take Profit Whether the market is trending or ranging If price breaks above resistance, that level can become new support. If price breaks below support, that level can become new resistance. This is known as role reversal and is a key concept in technical analysis. Trend Lines Trend lines help you see which direction the market is moving in. Uptrend The price keeps going higher over time You will see higher highs and higher lows A line can be drawn under the price to show the trend going up This means buyers are stronger Downtrend The price keeps going lower over time You will see lower highs and lower lows A line can be drawn above the price to show the trend going down This means sellers are stronger Why Trend Lines Matter Trend lines make it easy to see: If the market is going up or down Where price may bounce or reverse Whether it’s safer to buy (in uptrends) or sell (in downtrends) Common Trading Mistakes Beginners often lose money because they repeat the same mistakes. Understanding these early can help reduce stress and improve risk awareness. Ignoring Risk Management Having a solid risk management strategy in place is key to success in the markets. Trading with no Stop Loss Without a Stop Loss, one bad move can result in significant losses. Using High Leverage High leverage increases both potential gains and potential losses. Inexperienced traders are particularly exposed to this risk. Revenge Trading Trying to win back losses quickly usually makes the situation worse. Overtrading Opening too many trades leads to stress, confusion, and big losses. Trading Without a Plan Successful traders follow a clear strategy. Random trading is gambling. Not Understanding Margin, Equity, or Risk Knowing how your account is affected when the market moves is key. Trading Psychology Successful trading is not only about charts and strategies, it’s also about controlling your emotions. A strong trading mindset helps you stay consistent and avoid costly mistakes. Be Patient Good trades take time to develop. Rushing into the market often leads to unnecessary losses. Stick to Your Trading Plan Follow the rules you set for yourself. A plan keeps you disciplined, even when the market feels unpredictable. Avoid Emotional Trading Fear and greed are a trader’s biggest enemies. Decisions should be based on analysis, not feelings. Accept That Losses are Part of Trading No trader wins all the time. Losses are normal. What matters is managing them and learning from them. Protect Your Capital First Your main goal should be to keep your account safe. With capital, you can always find new

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Forex Trading eBook for Beginners​

Forex Trading eBook for Beginners