INTRODUCTION TO

FOREX TRADING
A COMPREHENSIVE
BEGINNER’S GUIDE
TABLE OF
CONTENTS
What is Forex Trading? 03

Understanding Forex Margin and Leverage 05

Why would you trade on margin and use leverage? 05

Benefits of using margin with a positive expectancy trading system 06

Running the math’s across using leverage on a simple trading system 06

Leverage and margin trading are risky 07

How to know what levels of leverage to use 08

Common mistakes traders make when using leverage 08

Use sensible levels of leverage 09

Ideas around leverage for the newbie trader 09

What to take into account when determining how much leverage to use 10

Key Forex Trading Terminology 11

Here are some of the most important terms you’ll need to know: 11

Trading Platforms 12

Take charge of the Forex market with the World’s most popular 12

Forex software – MT4 & MT5 12

Introduction to the Forex Majors & understanding the industry lingo 13

Forex Majors 14

What are Forex Cross Pairs? 16

What about the commodity currency pairs? 16

Forex Rollover Rates and Forex Swap Rates 17

How does ACY Securities calculate the swap charges? 18

What you need to know about swap rates 18

How to find the Forex swap rate on the currency pairs you are trading 18

Summing up your Introduction to Forex Trading Guide 21

WHAT IS
FOREX TRADING?
Forex, or foreign exchange, trading involves buying and selling different currencies in the global market.
Traders aim to profit from changes in the exchange rates between pairs of currencies.

Forex trading is done over-the-counter (OTC), which means it takes place electronically and is
decentralized, with no central exchange. Instead, the market operates 24 hours a day, 5 days a week,
across different time zones.

As a result, Forex trading offers numerous advantages, such as high liquidity, low transaction costs, and
the ability to profit from both rising and falling markets.

According to the latest data from the Bank for International Settlements, the global forex market has a
daily turnover of around $6.6 trillion, making it the largest and most liquid financial market in the world.

INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE 3

 Did you know…

• The forex market is open 24 hours a day, 5 days a week: Since the forex market is global and
decentralized, it operates around the clock, allowing traders to participate in the market at any time.
• The forex market is highly liquid: With over $6.6 trillion in daily turnover, the forex market is highly
liquid, which means that traders can easily buy and sell currencies at any time without significant
price slippage.
• The forex market is driven by geopolitical and economic events: The value of currencies can
fluctuate rapidly due to events such as elections, central bank announcements, and economic data
releases, such as the US Non Farm Payrolls Jobs Report, Inflation figures and GDP to name a few.
• The most traded currency pairs are called the “majors”: The most traded currency pairs in the forex
market are the EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, USD/CHF, and NZD/USD, which
are commonly referred to as the “majors.”
• Forex traders use leverage to amplify their trading power: In many regions of the world, leverage is
capped at 30 to 1 when trading the FX Majors, and some jurisdictions allow up to 500 to 1 leverage.
This can amplify potential profits, but also magnify potential losses.
• The forex market offers many different trading styles: Traders can participate in the forex market
using a variety of different trading styles, including day trading, swing trading, position trading, news
trading and algorithmic trading (in Metatrader we refer to this as using Expert Advisors or EAs).
• The forex market is global, but certain regions dominate trading: While the forex market is global,
certain regions dominate trading volume. For example, the majority of forex trading is done in
London, followed by New York and Tokyo.

Overall, the forex market offers

a diverse and exciting trading
environment, with many opportunities
for traders of all skill levels.

In the next sections, we will delve

deeper into how Forex trading
works and explore some of the key
advantages of this exciting market.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
UNDERSTANDING
FOREX MARGIN &
LEVERAGE
One of the greatest attractions of the Forex market is
the availability of leverage. Using leverage or trading
on margin is a great way to increase your market
exposure.

With margin accounts, a trader is allowed to trade with

borrowed money, using funds from his broker to open
and hold positions.

Though margin levels may vary from broker to broker,

most forex brokers in Australia offer margin levels
from 0.20% - 10%.

With the ESMA regulations in Europe, the maximum

leverage allowed for Forex brokers is 30 to 1.

If you are looking to open a live trading account, it is

best to give the support team a call to find out exactly
what the margin is across Forex, indices, precious
metals, oil and gold and cryptocurrencies.

Why would you trade on margin and use leverage?

For the simple reason, you can trade more money than you have in your trading account.

Margin trading only requires you to put aside a small portion of your trading capital to open a trading
position.

This margin requirement is what’s called the margin – this is the amount of money your broker will ask
you to put aside as collateral or a security deposit.

As an example, if you want to open a forex position amounting to $100,000, you may be required to have
the $5,000 (5%) as margin deposit to open the trade.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
Benefits of using margin with a positive expectancy trading system
Before you even consider trading on leverage, it is wise to work out whether your trading system has an
edge.

An edge is a probability that your system will deliver profits for every dollar you risk. In technical terms,
this is known as a positive expectancy.

One reason savvy traders use leverage is to compound the results of their trading system.

Running the math’s across using leverage on a simple trading system

You create a trading system which you have proven historically to generating returns which average 10%
return per annum. No historically tested system can predict what is going to happen in the future.

So, you cannot know for sure your system will continue performing at that level, but with enough data,
you have the confidence to know that on average it makes 10% while having a drawdown of 4%.

Let’s say you decide to apply 2 to 1 leverage.

Historically, $20,000 in your trading system has returned $1,000 at the end of 12 months on average.

If we use 2 to 1 leverage, it means we are going to double the size of our trading float from $20,000 to
$40,000.

In theory, and applying hypothetical data, our returns and drawdowns should on average be double.

Instead of making 10% per annum with 4% drawdown, we could potentially make $20% per annum with
8% drawdown.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
Leverage and margin trading are risky
Margin trading is a great opportunity to start investing in the markets with a rather small initial
investment.

But it’s also important to be aware of the risks while using leverage and margin trading, especially if
you invest in very volatile markets, such as Gold, Crude Oil or the Forex market. Consider this our risk
warning.

Why?

Because market prices can change direction quickly and you could face a situation where the market
moves against you, which will increase your risk of losing money.

It’s also possible that, as market prices move so quickly, you could lose more money than your initial
deposit.

Before this situation happens, your broker should issue a margin call when your balance reaches a
certain level. This provides an opportunity to top up your account to keep your positions open. You could
also choose to close some or all of your current open positions.

Of course, if you can’t meet the margin call, then all your positions will be automatically closed.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
How to know what levels of leverage to use
When using leverage, remember that your profits, as well as your losses (drawdowns), will be amplified
quickly.

So, the greater the leverage, the higher the profit/loss swings. Leverage is the ultimate double-edged
sword.

For this reason, you have to understand how leverage and margin trading work first, then how they
impact your overall trading performance.

Once you are comfortable, you need to work out how you can apply it to your trading systems.

Nearly every trader, having made an early initial profit of say $500, has said ‘If only I put ten times as
much money on this trade, then I would have made $5,000’.

Common mistakes traders make when using leverage

This is the trap many new traders have to come to terms with early in their trading careers.

Many of the world’s best traders, as documented in the Jack Schwager Market Wizard book series, have
initially blown up their trading accounts due to leverage.

A major mistake made by novice traders is using high leverage to make significant profits quickly.

However, one single change in the market could easily erase all previous gains and wipe out your live
account.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
Use sensible levels of leverage
Most importantly, use a level of leverage that is adapted to you – your risk tolerance, your trading needs
and financial goals, your experience, your trading style, and your trading capital.

For example, traders who have been in the markets for several years may use margin trading to gain
exposure to much bigger positions.

They could also use it to trade other markets -e.g. Commodities, Indices or Cryptocurrencies – while
keeping their positions in the forex markets.

It is essential to use sensible risk management strategies all focused on capital preservation.

Ideas around leverage for the newbie trader

When you are just starting, trade at low levels of leverage. Your current open positions should always
have a good ‘sleep at night factor’.

This means when you total all your positions, and if they all turned against you overnight, you would not
lose any sleep over the losses made.

And yes, losses are part and parcel of trading. Successful traders know how to keep their losses small
relative to their overall account size.

As a beginner, start small and learn the lessons that leverage provide. Learn how leverage impacts your
trading, your mindset and your bottom line profits and losses.

It is also wise to use a small amount of leverage to have more room for your positions to evolve without
risking too much of your trading capital.
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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
What to take into account when determining how much leverage to use
When you set your leverage ratio, consider a few things, such as the trading conditions (volatility,
liquidity, economic calendar), and your risk/reward ratio (stop-loss and take-profit levels).

Determining your leverage ratio means you’re controlling your risk to limit potential losses, as well as
avoiding major drawdowns in your account.

Once you know the level of your leverage, you should think about position sizing, which is all about
deciding how many lots to buy/sell when trading forex.

At ACY Securities, you can trade the following lot sizes:

• A standard lot, which (1 full lot) is $US100,000.

• A mini lot, which is $US10,000.
• A micro lot, which is $US1,000.

No matter if you use fundamental analysis, technical analysis or you code Expert Advisors (EAs), you
must work very hard to preserve your precious capital.

As you can see, leveraged trading when done in a sensible, risk-averse fashion can potentially help you
achieve your financial goals faster.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
KEY FOREX
TRADING TERMINOLOGY
• Understanding Pips

• Understanding Spread

• Understanding Lot Sizes

When you’re getting started with forex trading,

it’s important to understand some of the key
terminology used in the market.

Here are some of the most important terms you’ll need to know:

Pips: A pip is the smallest unit of measurement in the forex market, and represents the fourth decimal
place in most currency pairs. For example, if the EUR/USD pair moves from 1.0600 to 1.0605, that
represents a movement of 5 pips.

Spread: The spread is the difference between the bid price (the price at which you can sell a currency)
and the ask price (the price at which you can buy a currency). This represents the cost of trading, and is
typically measured in pips.

Lot Sizes: A lot is a standardized trading size in the forex market. There are three main types of lot sizes:
micro, mini, and full.

• A micro lot is 1,000 units of the base currency – ie 0.01 lots of EURUSD.

• A mini lot is 10,000 units of the base currency – 0.10 lots of EURUSD.

• A full lot (also known as a standard lot) is 100,000 units of the base currency – 1 lot of EURUSD.

So, for example, if you’re trading the EUR/USD pair and you buy 1 micro lot, you’re buying 1,000 euros. If
you buy 1 mini lot, you are buying 10,000 euros. And if you buy 1 full lot, you are buying 100,000 euros.

Understanding these key terms is essential for successful forex trading. By knowing what a pip, spread,
and lot size are, you’ll be able to better manage your trades and optimise your trading.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
TRADING
PLATFORMS
A forex trading platform is a software program that
allows traders to buy and sell currencies on the
foreign exchange market. These platforms typically
provide real-time quotes, advanced charting tools,
and a variety of technical indicators to help traders
make informed trading decisions.

Take charge of the Forex market with the World’s most popular Forex
software – MT4 & MT5

At ACY Securities, we offer our clients the flexibility to trade the global Forex and CFD markets on a range
of user-friendly trading platforms, including the widely popular MetaTrader 4 and MetaTrader 5.

Whether you prefer to trade from your desktop or on-the-go, we have you covered with our mobile and
web versions of MT4 and MT5. MT4 is the older of the two and has been around since 2005, while MT5
was released in 2010.

Our platforms are designed with advanced charting tools, real-time quotes, and the ability to customize
and automate your trading strategies to meet your unique trading needs.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
INTRODUCTION TO THE
FOREX MAJORS & UNDERSTANDING
THE INDUSTRY LINGO
If you’re getting started trading the global financial markets, one of the key challenges is understanding
the FX majors and the common language used to describe them.

Let’s start with understanding:

• What are the major FX pairs? and

• What are the cross pairs that matter in Forex trading?

• What are the commodities that are commonly the big movers and present a lot of trading
opportunities?

We'll talk a few abbreviations you need to know as well.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
Forex Majors
So let’s start with those FX majors.

At the top of the list is the Euro Dollar.

The Euro Dollar is the most heavily traded instrument in the world. The Euro Dollar is quoted as EURUSD,
and is a very big proxy for the risk trade, but we won’t go too deeply into how it moves and what changes
the price level of Euro Dollar.

Just firstly understand that its at the pointy end of your FX majors.

The next one is Cable or the GBP - The Great Britain Pound versus the US Dollar.

Bear in mind, a couple of key abbreviations here.

Firstly, the US Dollar can be called the greenback because of the bills being green and the Sterling against
the US Dollar can often be called Cable because in the old days, cable messages were sent from London
to New York.

That’s how GBP was traded against the USD, and is firmly number two in terms of total trading volume.

Number three is Dollar Yen. Pretty self-explanatory, it’s the US Dollar versus the Japanese Yen.

It is a very heavily traded pair and a very popular pair amongst FX day traders as well because it moves in
decent trading ranges.

Next is The Swissy, which is the US Dollar versus the Swiss Frank.

How to find that one. It’s USD/CHF. Swiss Franc being CHF.

Now when we talk about Swiss Franc and the US Dollar pairing, Dollar Swiss known as Swissy, this is often
a trade played out when there is some risk on risk off bias in the market because the Yen and the Swiss
Franc are very big safe Haven currencies.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
 So the ‘big four’ are:

• EURUSD

• GBPUSD

• USDJPY

• USDCHF

Next is Dollar CAD, and is the US Dollar versus the Canadian Dollar or the CAD.

Forex traders refer to this FX major as the Looney based on the coin being a ‘Loon’.

The Canadian dollar is often referred to as a "commodity currency" because Canada is a major exporter
of natural resources, such as oil, gas, timber, and minerals. As a result, the value of the Canadian dollar is
closely tied to the prices of these commodities in the global market.

When commodity prices rise, the demand for Canadian exports increases, leading to an increase in
demand for Canadian dollars. This causes the value of the Canadian dollar to rise in relation to other
currencies, especially those of countries that are large importers of Canadian commodities.

Conversely, when commodity prices fall, the demand for Canadian exports decreases, leading to a
decrease in demand for Canadian dollars. This causes the value of the Canadian dollar to fall in relation
to other currencies, especially those of countries that are large importers of Canadian commodities.

Overall, the term “commodity currency” reflects the close relationship between the Canadian economy,
its export-driven industries, and the value of the Canadian dollar in the global currency markets.

In addition to the Canadian dollar (CAD), there are two other currency pairs that are “commodity
currencies,” and fall into the FX Majors category.

First is the Australian dollar AUDUSD. Australia is a major exporter of natural resources, such as coal, iron
ore, and liquefied natural gas, among others. The value of the Australian dollar is closely tied to the prices
of these commodities in the global market. The AUDUSD is often referred to as the ‘Aussie’.

Second is the New Zealand dollar NZDUSD. New Zealand is a significant producer and exporter of
agricultural commodities, such as dairy products, meat, and wool. As with other commodity currencies,
the value of the New Zealand dollar is closely tied to the prices of these commodities in the global
market. The NZDUSD is often referred to as the ‘Kiwi’ or ‘The Bird.’

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
What are Forex Cross Pairs?
In forex trading, a “cross currency pair” or simply “cross pair” refers to a currency pair that does not
involve the US dollar (USD) as one of its components.

In other words, a cross pair is a currency pair in which both currencies are from economies other than
the United States.

The top 5 traded forex cross pairs, according to the Bank for International Settlements’ (BIS) Triennial
Central Bank Survey, are:

• EUR/JPY (Euro/Japanese yen): This currency pair is the most actively traded cross currency
pair in the world. It represents the exchange rate between the euro, the currency used in the
European Union, and the Japanese yen, the currency used in Japan.

• GBP/JPY (British pound/Japanese yen): This currency pair represents the exchange rate
between the British pound, the currency used in the United Kingdom, and the Japanese yen.
It is popular among traders due to its high volatility and the potential for significant price
movements.

• EUR/GBP (Euro/British pound): This currency pair represents the exchange rate between the
euro and the British pound. It is often used by traders as a way to hedge against volatility in the
euro or the British pound.

• EUR/CHF (Euro/Swiss franc): This currency pair represents the exchange rate between the euro
and the Swiss franc, the currency used in Switzerland. It is popular among traders due to the
stability of the Swiss franc and the potential for profit from the price movements of the euro.

• EUR/AUD (Euro/Australian dollar): This currency pair represents the exchange rate between
the euro and the Australian dollar, the currency used in Australia. It is popular among traders
due to the potential for profit from the price movements of the euro and the Australian dollar, as
well as the interest rate differential between the two currencies.

What about the commodity currency pairs?

Firstly, Gold. On the ACY platform, Gold is quoted as XAUUSD and we also refer to it as a precious metal.
Precious metals are one of the most volatile trading products in the international markets and this
includes Silver. Silver is quoted as XAGUSD on the ACY trading platforms.

In terms of oil, we offer two of the world’s most liquid crude oil contracts – Brent Crude and West Texas
Intermediate.

You can find these commodities in the ACY platform by looking for the symbols, USWTI and UKBRENT.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
FOREX ROLLOVER RATES
AND FOREX SWAP RATES
As a Forex trader, it is important to understand what a Forex swap rate is. To keep things simple, the
Forex swap rate is the rollover rates you pay or earn to hold your FX positions overnight.

When you trade Forex currency pairs, you are buying one currency and selling the other. When you are
long the EUR/USD, you are buying the Euro and selling the US dollar.

If you hold the position overnight, you incur an FX swap or swap charges.

We need to consider the current interest rates of both countries you are buying or selling.

You can get a rough idea if it would be a debit or credit by knowing the interest paid on the currency sold
and received on the currency bought.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
How does ACY Securities calculate the swap charges?

ACY Securities works with a number of financial institutions, which run their swap calculations daily.
These are based on risk-management analysis and current market conditions of the global markets.

It is important to note that each currency pair has its own swap charges based on the exchange rates and
interest rate differential of the two countries.

What you need to know about swap rates

• The Forex rollover or swaps are applied to your trading account only when positions are kept open
until the next trading day.

• Swaps are applied when the rollover occurs at the end of day, which is 00:00 server time.

• Some currency pairs may have negative swap rates on both sides, both ‘long’ and ‘short’.

• Each currency pair has its own swap charge and is measured on a standard size of 1.0 standard
lots (100,000 base units).

• On a Wednesday, spot FX transactions (2 days settlement) are value date Friday, and the swap
incurred will be calculated as three days (Fri-Sun).

How to find the Forex swap rate on the currency pairs you are trading

You can easily access the swap rates for all the Forex markets you are trading.

For the latest Swap rates, please download the ACY Securities MT4 Trading Platform and follow the
instructions below:

1. Login to your MT4 platform.

2. You should notice the Market Watch window down the left-hand side. If not, left click on View in the
top drop-down menu and left click on Market Watch.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
3. Right-click on any symbol in the Market Watch window and select Symbols.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
4. Then right-click on the currency pair you wish to check and select Properties.

5. You will see the swap rates as per the highlights below.

The best way to start trading is to open a demo account or a live trading account. You can then access the
rates for each currency pair.

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INTRODUCTION TO FOREX TRADING A COMPREHENSIVE BEGINNER’S GUIDE
SUMMING UP YOUR INTRODUCTION
TO FOREX TRADING GUIDE
As we conclude this guide to getting started in forex trading, we hope you have gained a deeper
understanding of the various concepts and strategies involved in this exciting and dynamic market.

The forex market offers a wealth of opportunities to traders of all levels, from beginners just
starting out to seasoned professionals with years of experience.

Whether you are interested in trading the major currency pairs, exploring the nuances of the
exotic crosses, or honing your skills as a day trader, the forex market has something to offer.
With the right knowledge, tools, and approach, you can take advantage of the many opportunities
available in this fast-paced and constantly evolving market.

Remember, success in forex trading requires discipline, perseverance, and a commitment to

ongoing learning and growth. By staying focused, staying informed, and staying true to your
trading plan, you can position yourself for long-term success in this exciting and rewarding field.

We wish you all the best as you embark on your forex trading journey, and we look forward to
being your partner and guide along the way.
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Legal Disclaimer
Foreign exchange and derivatives trading carry a high level of risk. Before you decide to trade foreign exchange, we
encourage you to consider your investment objectives, your risk tolerance and trading experience. It is possible to lose
more than your initial investment, so do not invest money you cannot afford to lose. ACY Securities provides general
advice that does not consider your objectives, financial situation or needs. The content of this publication must not be
construed as personal advice; please seek advice from an independent financial or tax advisor if you have any
questions. The disclosure documents are available upon request or registration. If there is any advice in this
publication, it is general advice only.

ACY Securities Pty Ltd (“ACY AU”) is regulated by the Australian Securities and Investments Commission (ASIC
AFSL:403863). Registered address: Level 18, 799 Pacific Hwy, Chatswood NSW 2067.

ACY Capital Australia LLC ('ACY LLC'), ACY LLC is incorporated in St Vincent and the Grenadines (Company number:
2610 LLC 2022). Registered address: Suite 305, Griffith Corporate Centre, Beachmont, Kingstown.

ACY Securities is a brand name of ACY AU and ACY LLC. Australian residents are onboarded with ACY AU and non-
Australian residents, subject to regulation, are onboarded with ACY LLC.

This is a generic publication and isn't directed at residents of any particular country or intended for distribution to, or
use by, any person in any country or jurisdiction where that distribution or use would be contrary to local law or
regulation. Please consider the relevant laws and regulations in your country of residence before applying to become
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