This article was originally published by Deriv on 3 Feb 2022.
What is forex live trading?
Forex live trading involves fast-paced, short-term online trading in the foreign exchange market, commonly called forex or FX. It is the largest and most widely traded financial market in the world.
While most forex trading occurs online, you’ve likely encountered it offline too. For instance, when travelling abroad—say to the United States—you exchange your home currency for USD. The exchange rate determines how much USD you receive, and these rates constantly fluctuate based on currency supply and demand.
In essence, forex trading means simultaneously buying one currency and selling another, which is why currencies are always quoted in pairs—like EUR/USD or GBP/USD. In a pair, the first currency (EUR) is the one you buy, while the second (USD) is the one you sell.
Which forex currencies can I trade on Deriv?
Online forex trading, like its offline counterpart, revolves around currency pairs. There are three main types:
- Major pairs – the world’s most traded currencies, e.g., GBP/USD, EUR/GBP
- Minor pairs – less liquid currency pairs, e.g., NZD/USD, AUD/CAD
- Exotic pairs – a major currency paired with a currency from an emerging economy, e.g., EUR/HKD
Deriv also offers micro forex pairs, which are traded in smaller sizes than standard pairs, such as EUR/USD or USD/JPY.
For a full list of forex currency pairs available on Deriv, visit the forex page.
How to get started in forex trading
There are several ways to begin live forex trading. On Deriv, you can trade currency pairs using digital options or CFDs. Regardless of the method, these tips can help you start on the right track:
- Learn the forex terminology
- Base currency: The currency you hold. In EUR/USD, EUR is the base currency, representing how many US dollars one euro can buy.
- Quote currency: The currency used to value the base currency. In EUR/USD, USD is the quote currency.
- Bid price: The price a broker will pay for the base currency.
- Ask price: The price at which a broker will sell the quote currency.
- Spread: The difference between the ask and bid prices (Ask – Bid = Spread). When buying, you pay the ask; when selling, you receive the bid.
- Analyse the market
Currency prices can be influenced by political events, elections, government debt, or unexpected natural disasters. Keeping track of market news and major events is crucial for making informed trading decisions. Strong analytical skills and market knowledge are essential to identify profitable opportunities. - Choose the right broker
When selecting a forex broker, consider whether they:- Offer demo accounts to practice risk-free trading
- Provide a wide range of forex pairs and trading products to diversify your portfolio
- Offer 24/7 customer support
- Provide convenient deposit and withdrawal options in your country
- Hold the necessary licences and comply with regulations in your jurisdiction
- Practice with a demo account
A demo account allows you to familiarise yourself with the trading platform and test strategies using virtual funds. This risk-free practice builds confidence before transitioning to real-money trading.
For additional guidance, download the free ebook “How to Trade the Forex Market” by veteran trader Vince Stanzione, which includes practical strategies and tips for beginners.
If you want, I can also make a shorter, more concise version that’s easier to read for beginners. Do you want me to do that?
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