Almost everything written about forex assumes you already know what it is. This page does not.
The Market, and the Number You Will See Misquoted
Foreign exchange is the business of swapping one currency for another. It is not an invention of trading apps — it exists because a German company paying a Japanese supplier needs yen, and a pension fund buying US shares needs dollars. Every one of those transactions is a foreign exchange trade, and together they make the largest financial market in the world.
The Bank for International Settlements measures it every three years. In its most recent Triennial Central Bank Survey, trading averaged $9.6 trillion per day in April 2025, up 28% from 2022. That figure came from central banks in 52 jurisdictions collecting data from more than 1,100 banks and dealers, which is why it is the number worth quoting rather than the ones circulating on trading blogs.
Now the part almost nobody adds, and it matters more than the headline:
- That is overwhelmingly institutional, not retail. Banks, corporations, asset managers and central banks make up the vast bulk of it. Retail speculation is a rounding error inside it.
- Most of it is not the kind of trading you are reading about. FX swaps are the largest instrument. Spot trading — buying one currency against another at today's price, which is what a retail platform shows you — rose 42% but still accounts for only 31% of global turnover.
- The US dollar is on one side of 89% of all trades. The market is far less diverse than a platform's list of pairs suggests.
So the "$9.6 trillion a day" statistic is true, and it is not evidence that there is easy money in it for a retail account. It is evidence that the plumbing of world trade is enormous.
What a Currency Pair Actually Is
Prices are always quoted as a pair, because a currency has no price except against another one. EUR/USD at 1.0850 means one euro costs 1.0850 US dollars.
- The first currency is the base. The second is the quote.
- Buying EUR/USD means buying euros and selling dollars at the same time. There is no way to buy one without selling the other — that is what "exchange" means.
- If EUR/USD moves to 1.0860 you have made money on a buy, because your euros are now worth more dollars.
That last movement, 1.0850 to 1.0860, is ten pips. A pip is the standard smallest increment, the fourth decimal place on most pairs and the second on yen pairs. Everything in retail forex — spreads, costs, profit, loss — is counted in pips, so it is the one piece of jargon worth learning before any other.
What You Are Actually Trading (Probably Not Currency)
Here is the distinction that catches most beginners, and it decides which rules apply to you.
When a retail trader in Europe, the UK or Australia "trades forex", they are almost never taking delivery of euros. They are trading a contract for difference — an agreement with the broker to exchange the difference in a price between opening and closing. No currency changes hands. You never own anything.
This is not a technicality:
- It is why you can go short as easily as long, and why you can trade with a fraction of the position's value as margin.
- It is why CFDs are not available to retail clients in the United States at all, which is why an American reader finds most broker comparison tables inapplicable. We cover that in MetaTrader brokers for US traders.
- It is why the loss statistics below exist and are legally mandatory.
The differences between forex, CFDs and crypto trading are worth understanding properly, and we set them out in forex vs CFD vs crypto trading.
Leverage: The Thing That Makes It Dangerous
Margin means you put up a fraction of a position's value and the broker fronts the rest. In the EEA and UK a retail client can put up as little as 1/30th of a major currency position. That is what leverage is.
It cuts both ways with perfect symmetry, and this is the sentence beginners skip: leverage multiplies losses exactly as much as it multiplies gains. A 1% move against a 30:1 position removes 30% of your capital. A 3.3% move removes all of it.
That is not a warning bolted on for compliance. It is the arithmetic, and it is the single biggest reason the numbers in the next section look the way they do. We go through it properly in how leverage works.
What the Brokers Themselves Are Required to Tell You
Regulated brokers in Europe and the UK must publish the percentage of their own retail clients who lose money. They are not marketing figures — they are mandated, audited and refreshed periodically. From the brokers on our own file, sourced from each firm's own disclosure:
| Broker | Retail accounts that lose money |
|---|---|
| Saxo | 64% |
| CMC Markets | 68% |
| IG | 69% |
| XTB | 72% |
| Pepperstone (FCA entity) | 72.9% |
| IC Markets (EU) | 72.52% |
| OANDA (Europe) | 76.6% |
Between roughly two-thirds and three-quarters of retail accounts lose money, at every single regulated broker. Not at the bad ones — at all of them, including the largest and most respected names in the industry. Any page that tells you what forex is without showing you this is selling you something.
This does not mean it is a scam. It means it is genuinely difficult, that the people on the other side of your trade are better resourced than you, and that anyone promising otherwise is lying.
Where to Go Next
If you have read this far and still want to look properly, the order that makes sense is:
- Understand the rules where you live, because they differ enormously and they decide your leverage, your protections and even which brokers may accept you. Start with forex rules by region.
- Learn what a position actually costs before you open one, in spread versus commission.
- Practise without money. A demo account uses live prices and costs nothing, and it will teach you more in a fortnight than any article. See demo accounts and practice trading.
- Work out your position size before you trade, not after, using how to calculate position size.
Sources: market turnover, the spot share, the dollar's share and the survey's coverage are from the Bank for International Settlements' Triennial Central Bank Survey press release for April 2025. The retail loss percentages are each broker's own mandated disclosure, recorded in this site's broker dataset with the entity, source URL and date read.
