Foreign exchange market
Introduction
01
History of Forex
• Originated from the Gold Standard in the 19th century.
• Modern Forex began in 1973 after the end of the Bretton Woods system.
• Online trading revolutionized the market in the 1990s.
What is a �Forex?
Forex (Foreign Exchange) is the global market where currencies are traded, essentially buying one currency while selling another, aiming to profit from changes in exchange rates, and it's the world's largest and most liquid financial market, operating 24 hours a day, five days a week.
Market analysis
There are two types of analysis of markets:
Fundamental and technical .
Technical Analysis (Most used by traders)
Technical analysis studies price charts.
You make decisions based on:Charts,
Trends, Support and Resistance, Indicators, Chart Patterns.
Fundamental Analysis
This type studies economic and political factors.
You make decisions based on:
Economic data :news, Interest rate decisions (FOMC, ECB),
Inflation (CPI),Employment (NFP),GDP,Retail sales
Political events:
Elections,Wars,Government statements
Central bank actions:
-When they raise or cut interest rates
If a country’s economy strengthens, its currency usually gets stronger.
Example:
�If US increases interest rates → USD becomes stronger.
9,600,000,000
Daily trading volume in 2025 (US dollars)
Key Aspects of Forex
Currencies are always traded in pairs (e.g., USD/JPY), where you buy the first (base) currency and sell the second (quote) currency, or vice versa.
There's no physical exchange; trading happens electronically through global networks, allowing continuous operation across major financial centers.
Currency values fluctuate due to economic news, political events, and interest rates, creating opportunities for profit or risk.
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Currency Pairs
Decentralized & 24/5 Market
Participants
Includes
banks, corporations,
central banks,
investment firms,
and individual retail traders
Drivers of Value
How it works
Currencies Are Traded in Pairs
You always trade one currency against another, such as:
EUR/USD
GBP/JPY
USD/CHF
Major currency pairs
EUR/USD
GBP/USD
USD/JPY
USD/CHF
USD/CAD
AUD/USD
NZD/USD
A currency pair has two parts:
Base currency → the first currency
Quote currency → the second currency
EUR/USD it’s 1 euro compared to 1 dollar
1.17400 is the price of this pair for yesterday.
1 euro equals 1.17 dollars
How it Works
You believe the Euro will strengthen against the Dollar.
You buy the EUR/USD pair, meaning you're buying Euros and selling Dollars.
If the Euro strengthens, you can sell the pair back for more Dollars than you spent, making a profit.
Key Aspects of Forex
Prices move because of:
Interest rate changes
Inflation
Economic news
Political events
Market sentiment
Large banks (“market makers”)
Main participants:
Central banks (Fed, ECB, BoE)
Large commercial banks
Hedge funds
Multinational companies
Retail traders (normal people trading online)
Retail traders are only 5–7% of total volume.
Why Currency Prices Change
Who Participates in the Forex Market?
Key Aspects of Forex
Forex is open 24 hours a day, 5 days a week.
There are four major trading sessions:
Sydney
Tokyo
London
New York
The biggest movement happens when London + New York overlap.
Forex Market Hours
How Trading Works
You trade through a forex broker, using two types of orders:
BUY (Long): You expect the price to go up.
SELL (Short): You expect the price to go down.
Brokers show two prices:
Bid (sell price)
Ask (buy price)
The difference is called spread, which is how brokers earn money.
Key Aspects of Forex
Leverage allows you to trade bigger positions with a small amount of money.
Example: Leverage = 1:100�$100 lets you control $10,000 worth of currency.
This increases profit potential AND risk.
Profit is measured in pips.
Example:�EUR/USD moves from 1.1700 → 1.1710�That is 10 pips.
If you traded 0.1 lot:�10 pips × $1 = $10 profit
In forex:
1 lot = 100,000 units
0.1 lot = 10,000 units
0.01 lot = 1,000 units (micro lot)
Small accounts usually trade 0.01 lots.
Forex is risky because:
Prices move fast
Leverage can cause large losses
Emotional trading leads to mistakes
Poor risk management can blow an account
What Is Leverage?
What Is a Lot?
How Profit Is Calculated
Risks of Forex
Long and Short trades
If you want to analyse markets and want to see what is happening in the market , you can use this platforms and apps below
TradingView ( for technical analysis)
Investing.com(for fundamentals)
Metatrader 5 (trading platform)
XM,Exness,Libertex and others(brokers for retail traders)
THANKS FOR YOUR ATTENTION