Your Forex Quick Start and Reference Guide
"Forex" - Foreign Exchange - The price paid for one currency for another currency.
The Forex or FX market is the largest market in the world by daily notional trading volume, which reports estimating the daily turnover in the FX market at $6.6 trillion. That means we see more total purchasing power or value change hands in the FX market than any other asset class in the world on a day-to-day basis. Of course, this makes sense, since we're talking about currency after all, and currency is the great medium that connects all world markets.
The FX market isn't just traded at a single [centralized exchange] though; there is no "New York Stock Exchange" of the FX world where all transactions take place for a given currency, as no single trading venue has a monopoly on trading FX. Instead, FX is considered an Over the Counter (OTC) product and is traded all over the world. The backbone of the market are the FX trading desks at major international banks (connecting to each other and making up the interbank market), liquidity providers (firms who do the same function as a bank's FX desk, just without the rest of the bank attached to them.) and there is a fair bit of speculating taking place on a daily basis as well.
As an individual trader, your access to the FX markets will start with your broker of choice. Your broker's job is to connect you to one or more FX trading venues. Given the size and might of the FX market, and its OTC nature, FX trading also has one of the lowest barriers to entry for retail traders worldwide. There are no pattern day trading rules (PDT) like we see in the US stock markets, the brokerage industry is highly competitive so the cost of trading is low, and you can typically start an account with just a few hundred dollars (or less, but we will get into recommended account sizes later.)
This low barrier to entry can be a double-edged sword. We've seen an influx of scammers and social media 'influencers' presenting forex as an "easy" and "quick" way to get rich. Trading FX, just like any type of trading, carries risk. Anyone trying to get rich overnight by trading FX will likely just end up blowing their account. We need to stress this and hope with the information you find in this wiki, you will see the scams on social media for what they really are: The social media influencer is only trying to make money off you (referrals, selling courses, mentorship, etc..) They do not actually make money from trading. If they did, they would not bother putting so many hours into a 'lifestyle' Instagram with Lambos and Gucci, or so many hours randomly messaging strangers on the net. No matter what kind of track record an influencer shows you (doctored and fake images are common, but even trading software can be manipulated to display fake results,) 99.99% of the time they are out to rip you off.
Here's a simple logic test: If a social media guru/mentor is showing off how they can turn $100 into $50k in a few weeks, why are they working so hard to get you to fork over a few bucks for mentorship? Or a course? Or to sign up for a given broker or service? Why aren't they just living it up on a beach somewhere?
So with that said, if you are serious about learning this market, and passionate about trading, the info below will help you get started:
By no means is this a comprehensive list, but any and all resources here have been vetted by professional traders as great resources having contributed to their own respective trader development (especially at the beginning.)
Education and Courses
We do not recommend paid courses in general. You do not need to pay for a course to learn the basics of FX trading. Paid programs typically teach what can be found for free online, or for a very low cost in book format. Paid courses typically hook people on the idea that after they cover the market basics, the student will learn a profitable strategy and be ready to make money from day one. This is simply not the case 99.9% of the time, as most published strategies are not effective. Don't waste your money, and instead consider the free courses or guilds below:
- Volatility.red has many ever-expanding comprehensive resources on subjects such as Fundamental Analysis, Sentiment Analysis, Technical Analysis, Trading Psychology, Central Banks, Economic Data Releases, Futures Market, Speculating, Trader Scouting and Prop Firms Overview and Comparison, Forex Brokers, and so much more. Just keep clicking through on the links and you will continue to find extremely valuable information that will help you increase your trading skills in the financial markets. Volatility.red is a free Wiki resource on all things related to trading in the financial markets.
- BabyPips School of Pipsology <=START HERE. THIS IS YOUR ENTRY INTO THE WORLD OF FOREX. COMPLETE THE ENTIRE SCHOOL. Despite Babypips being a 3rd party commercial resource, we will give credit where credit is due: Babypips' "School of Pipsology" is a great example of the free and robust forex education you can find online without having to spend a dime.
- Lehman Brothers Foreign Exchange Training Manual - Don't let the company name fool you, this is a solid manual and was used to train up institutional traders for many years.
- Market Life Trading by Adam Grimes - Specifically the free 22 hour long course on trading in general. Adam comes from a prop trading background and structured his free material around the trader development process common in the prop trading world. The focus is on teaching people how to come up with strategies (observations in the market, testing out ideas, refining, etc...) instead of just trying to teach a system.
Recommended Forex Books for New and Developing Traders - A list of recommended books covering not only the basics, but advanced subjects and trading psychology.
Live Public Trading Chatroom
While there are many trading chatrooms that can be found online, most of them are commercial in nature. That is, they are built up around a commercial product or service, or are commercially biased in their existence.
Volatiltiy.RED works closely with one of the cleanest, well moderated, and active online chatrooms in the trading space: FXGears's Live Public Trading Chatroom This chatroom serves the following online communities:
- The FXGears.com Trading Forum
- The Reddit extension of the FXGears.com community, /r/forex
- The /r/AlgoTrading subreddit
- The /r/dividends subreddit
So make sure to join us in chat during market hours! FXGears.com's Live Public Trading Chatroom
You need an economic calendar. Why? As you will read in nearly every 'intro to Forex' resource: news is a catalyst for change and volatility the market, so you need to know when scheduled announcements are coming.
- Tradingview Economic Calendar - TradingView's calendar might not be the best, but you can easily link to currency pairs and have decent charting at your fingertips with TradingView so it makes the list
- Forex Factory Economic Calendar - ForexFactory might be known for its forums, but its real gem is its front-page economics calendar. You can expand historical economic data releases, as well as info on what a given economic event means for the markets
If you're new to the FX world, it's best not to get caught up in news trading until you have spent some time understanding how news impacts the markets. However, it's a good idea to read through global economic news to see how international trade, economic data, and politics can affect a currency's exchange rates. These news sources will not be time-sensitive, but great for reading along and getting a general feel for the fundamentals of the market.
- Reuters Finance - Decent global coverage of FX news
- Bloomberg - Select your desired currency pair, and a news feed will appear on the right side of the resulting page
Other sources such as FXStreet, Forex Live, etc... might have made the list, if not for their heavy commercial bias toward advertising partner FX brokers. We prefer to recommend traditional financial news sources that have a currency section over dedicated sites for this reason.
Tweetdeck Economic News Streaming Setup |Twitter / Tweetdeck News Streaming
Recommended Twitter setup: How to setup Twitter to stream the latest FX and Economic news on FXGears.com
Twitter is a social media platform, meaning that not everything posted by Twitter members is accurate, timely, or of practical use. Not only will there be bias in what gets popular on Twitter, but Twitter can often become an echo chamber if you only follow like-minded traders or politically slanted news sources. Stick to the list of Twitter accounts in the guide above for the best results as the accounts listed are central banks, squawk services, or news agencies of good standing.
Keep in mind that the majority of forum users are going to be other new traders, so take anything you read on such platforms with a grain of salt. However, for idea generation, entertainment, or the like, browsing trading forums can be a good exercise:
- The FXGears.com Trading Community - We work closely with this community and recommend select threads by its founder, Jack Larkin, on trading professionally
- FXGears' /r/forex Subreddit - While not technically a forum, it's like a forum given it allows the community to post topics and comment replies
- ForexFactory - One of the larger FX related forums on the net
- Babypips - Very newb friendly, but this is a disadvantage as much as it is an advantage
- EliteTrader - Old school trading forum that has a Forex section
If you're going to base your trade ideas off the chart, then reliable charting is a MUST for your trading setup. It's often best to have two charting packages handy while trading (for comparison, or if one feed were to drop during your trade day.)
- TradingView - Works anywhere, on the web, on Android or Apple devices, TradingView is an excellent and free charting tool - Make sure to check out their 'Full Featured Chart' by clicking on the respective button from this page
- Overview of popular retail forex platforms for demoing - Alternatively, you could use a demo account from a high quality forex broker
Prop / Scouting Firms
One way to approach the industry instead of opening your own trading account would be trading for a prop firm. We have a great writeup about forex Prop / Scouting firms here. - We worked closely with the industry experts at FXGears.com to bring you this info.
Virtual Private Servers (VPS)
If you're going to run Expert Advisers (EAs) or your own custom code to trade, you'll want to do so on a reliable computing platform. A VPS for trading will typically be managed, have good latency between the VPS provider's network and your broker's trade servers, and will always be running and connected. Considerations and overview of recommended VPS providers.
Tick Data for Backtesting and Algo Trading
If you're using a backtesting suite, such as ForexTester, TickDataSuite, MetaTrader, BuildAlpha, etc..) or your own custom written backtest code, you'll need a source of price data. The following section of our wiki will provide instructions on how to extract tick level forex data from multiple sources: HOWTO get free Forex Tick Data for backtesting.
Some services are worth paying for, but aren't required to be proficient and consistent trader. Here we list commonly paid for services and give you an idea of why they are worth the fee and what they cost.
Paid Education / Paid Courses
As per the section on finding free education / courses online, we do not currently recommend paying for FX educational material.
We will make one exception in the case of Prop / Trader Scouting Firms who give access to training material as part of their tryout fees. Generally speaking, the prop firm's interests are more in line with the trader, as they wish for the trader to be successful and can earn revenue from the trader's activity in the markets. This means you are less likely to get "fluff" material from such sources, and less likely to find out the course is just a big sales pitch for some more expensive program. So if you go down the route of a trader scouting program, do make sure to check out any educational material they provide to their users.
Real-time news feeds can be quite expensive and are more commonly seen on institutional trade desks where their more advanced features are put to use.
- Bloomberg Terminal - Price is estimated at USD $20,000/yr starting, and each data feed is a separate subscription
- Reuters Eikon - News feeds are hooked into Reuters' Eikon platform. Price is estimated to be $3,600-$22,000/yr depending on setup
- Dow Jones NewsWire: Price is estimated at $1,440 per year. Some brokers offer delayed Dow Jones news feeds, or filtered feeds, through their platforms at a reduced cost
Typically cheaper than newswires, squawk services offer live running commentary on news events. By default, a squawk service will add a delay between when a time-sensitive news release hits the wire, and when you hear it come over the squawk broadcast, as they are first interpreted and then read aloud by the news anchor, but in return, you get an experienced company curating otherwise noisy feeds for you.
- Newsquawk - Formally RANsquawk, Newsquawk has a long history in this space
- Livesquawk - Livesquawk is a solid option and includes a text-based news feed along with their subscription
We do not recommend any paid chatroom; they are often not worth their costs and are usually part of an up-sell tactic to push more products.
The idea that you'd pay to follow another trader (or group of traders) in a chatroom and copy them as you learn might seem like a smart way of gaining experience, but the overwhelming majority of these chats are only out to earn subscription income and the people running them cannot consistently trade. Worse yet, even if you find a legit trader running a paid chat, since you can't be inside their head as they make their trades it is often quite hard to learn from such an environment beyond the basics.
IMPORTANT: YOU ARE RESPONSIBLE FOR DUE DILIGENCE WHEN CHOOSING A BROKER
There are many factors to consider when choosing a broker but some of the most important factors are regulation, execution quality, and ease of deposit/withdrawals. Being "regulated" on it's own is not a guarantee of protection against bad brokers; often bad brokers will be regulated out of a jurisdiction that has lax rules and weak enforcement, so their marketing team can boast about being regulated while not actually providing much protection to their clients or having much oversight by governing bodies. Consider WHERE, HOW, and by WHO a broker is regulated.