Forex, short for foreign exchange, is the market where currencies are exchanged. It is the largest financial market in the world, and it is also one of the easiest places for beginners to lose money, mostly because of leverage. This guide explains the vocabulary (pairs, pips, lots, spreads, leverage), works through examples, and then covers what Indian residents are allowed to trade. It is educational, not advice.
Currencies are always traded in pairs. In EUR/USD = 1.1000, EUR is the base currency and USD is the quote currency. The price says one euro costs 1.10 US dollars. If the price rises to 1.1100, the euro has strengthened against the dollar; if it falls, the euro has weakened. Pairs are grouped into majors (those involving the US dollar, such as EUR/USD, GBP/USD, USD/JPY), crosses (major currencies against each other without the dollar) and exotics (a major against a smaller or emerging currency). The rupee pairs such as USD/INR are tracked closely in India; you can see it on the India markets page.
A pip is the standard small step in a forex price: 0.0001 for most pairs, and 0.01 for pairs quoted in yen. If EUR/USD moves from 1.1000 to 1.1020, it has moved 20 pips. Many brokers also show a fractional "pipette", a tenth of a pip.
A standard lot is 100,000 units of the base currency. For EUR/USD, one pip on one standard lot is worth about 10 US dollars. So:
Pip values differ by pair and change with exchange rates, so always check your broker's calculator. Exchange-traded currency contracts in India (for instance on NSE) have their own contract sizes, so read the exchange's current specifications.
Every pair has two prices: the bid (what you can sell at) and the ask (what you can buy at). The difference is the spread. You pay it every time you open a position, so a trade starts slightly in the red. Spreads are usually tight on majors during busy hours and wider on exotic pairs, overnight and around news. Related costs are slippage (getting filled at a worse price than expected) and any commission or overnight financing charges.
Leverage lets you control a larger position than your own money would buy, by posting a smaller deposit called margin. Example: with 10x leverage, a 10,000-dollar position needs 1,000 dollars of margin. That feels efficient, but the maths works against you too:
If losses eat into your margin, the broker can issue a margin call or close positions for you. Beginners often fail not because they misjudge the market but because their position was too large for the stop-loss they chose.
The free forex track walks through pairs, pips, leverage, sessions and the Indian rules, and the paper-trading simulator lets you place USD/INR, EUR/USD, GBP/USD and other pairs with virtual funds.
START THE FOREX TRACK →Suppose you have a 10,000-dollar account and you are willing to lose at most 1% (100 dollars) on one idea. Your plan puts the stop-loss 50 pips from entry. Divide: 100 dollars / 50 pips = 2 dollars per pip. Since one pip on a standard lot is about 10 dollars, that is 0.2 lots. The leverage you can use is irrelevant to that answer; the loss you are willing to accept sets the size. Our stop-loss and position-sizing guide goes deeper.
Forex trades nearly 24 hours a day from Monday to Friday as financial centres open in turn: Sydney, Tokyo, London and New York. In IST the London session is roughly the afternoon and evening, New York roughly the evening to the early hours, and the London and New York overlap is usually the busiest. Exact times shift with daylight saving. See the full IST timetable. Major releases such as US jobs and inflation data and central-bank decisions can move prices sharply, with wider spreads; the economic calendar lists them in IST.
This is the most important section. Spot forex through offshore retail brokers is generally outside what the FEMA and RBI framework permits for residents. Residents can trade currency derivatives on recognised Indian exchanges, through SEBI-registered brokers, in the permitted pairs. The IFSC route at GIFT City is another regulated path to some global products. Our full explainer, Is forex trading legal in India?, covers the pairs, the RBI Alert List and the penalties. Always confirm the latest position with the RBI and SEBI before trading real money.
Next step: test a real holding with Samjho Bhai, our free Buy/Hold/Sell review for Indian stocks, crypto, US indices and gold. Then read forex risk management and the 1% rule. For guided, live practice, see the mentorship Forex track.
A pip is the standard small price step: 0.0001 for most currency pairs and 0.01 for pairs quoted in yen. If EUR/USD moves from 1.1000 to 1.1020, that is 20 pips.
For EUR/USD, one pip on one standard lot (100,000 units) is about 10 US dollars. Pip value varies by pair and exchange rate, so use your broker's calculator.
Residents can trade currency derivatives on recognised Indian exchanges in permitted pairs through SEBI-registered brokers. Trading spot forex through offshore retail platforms is outside the permitted framework. Check the RBI and SEBI for the latest rules.
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