What is forex? Currency trading, explained
Forex is trading one currency for another, like changing pesos to dollars at a money changer, but to make a profit. Here it is with example pesos.
Updated Nov 1, 2026
Basahin sa FilipinoWhat is forex?
Forex (short for foreign exchange, also called FX) is trading currencies against each other, betting that one gets stronger or weaker.
| Step | Rate (₱ per $1, example) | You have |
|---|---|---|
| Change ₱58,000 to dollars | 58.00 | $1,000 |
| The dollar gets stronger | 59.00 | $1,000, now worth ₱59,000 |
| Change back | 59.00 | ₱59,000: +₱1,000 profit (+1.7%) |
If the dollar weakened to 57.00 instead, you would get ₱57,000 back: a −₱1,000 loss.
What is a currency pair, like EUR/USD?
Forex prices always come in pairs: how much of the second currency buys one of the first.
| Pair | Means | Example price |
|---|---|---|
| USD/PHP | Pesos for $1 | 58.00 |
| EUR/USD | Dollars for €1 | 1.0850 |
| USD/JPY | Yen for $1 | 150.20 |
Buying EUR/USD is betting the euro gets stronger against the dollar. Selling it is betting it gets weaker.
What is a pip?
A pip is the smallest usual step in a currency price: the fourth decimal for most pairs. EUR/USD moving from 1.0850 to 1.0851 is one pip.
| Trade size | One pip is worth about |
|---|---|
| €1,000 | $0.10 |
| €10,000 | $1 |
| €100,000 (a "standard lot") | $10 |
Why does almost everyone use leverage in forex?
Currencies move very little, often 0.3–1% in a day. To make those small moves worth anything, forex brokers lend heavily, often 50× to 500×.
| Your money | Leverage | You control | A 1% move against you |
|---|---|---|---|
| $100 | 1× | $100 | −$1 |
| $100 | 50× | $5,000 | −$50: half your money |
| $100 | 100× | $10,000 | −$100: all of it (liquidated) |
This is why most beginner forex accounts lose money. See the leverage and liquidation article for how it works.
What forex scams should I watch out for?
- Fixed monthly returns, like "earn 10% a month from forex": no real trading can promise that.
- Unregistered brokers or "account managers" who trade your money for you.
- Pay-to-join groups selling "signals" with screenshots of huge wins.
- Pressure to recruit friends to unlock your profits.
In the Philippines, the SEC regularly warns about unregistered forex and "investment" schemes. Check the SEC’s advisories before giving anyone money.
How is forex different from crypto?
| Forex | Crypto | |
|---|---|---|
| What you trade | National currencies | Digital coins |
| Typical daily move | About 0.3–1% | About 2–10% or more |
| Open | 24 hours, Monday to Friday | 24/7 |
| Leverage | Almost always, often 50×–500× | Common on futures; none when buying coins |
Can I practise forex on Tradeground?
Not yet. Tradeground is for crypto today. Forex usually goes with leverage, which Tradeground Pro already lets you practise on coins, so forex may come later.