What is Forex or FX?
Explaining the anatomy of currency pairs, base/quote logic, pips and spreads, how FX differs from crypto, and why trading sessions matter.
Forex (FX) is the global market where the value of one currency against another is bought and sold. Every trade is on a pair, like EUR/USD. The price is quoted per one unit of the base currency (EUR), expressed in the quote currency (USD).
Why it matters
Many prop firms and leveraged products are built on FX. If you do not know pips, spreads, and session hours, you cannot understand the real cost of a trade or why price seems to “jump” at certain hours.
The anatomy of a pair works like this: if EUR/USD = 1.0850, one euro is worth 1.0850 dollars. If the price moves to 1.0851, the euro has gained value. That smallest standard move is usually called a “pip,” and it is the unit of profit and loss.
Pip and spread cost
- Spread
- The gap between the buy and sell price (in pips).
- Pip value
- What a one-pip move is worth in money.
- Lot
- The size of the trade.
FX vs the crypto market
| Forex | Crypto | |
|---|---|---|
| When it is open | 24h on weekdays, closed weekends | 24/7 |
| Liquidity | Usually very high | Varies by asset |
| Volatility | Generally lower | Generally higher |
| Regulation | Established in most countries | Varies by country |
The main trading sessions
- Asian session
Usually calmer; some pairs trade in a narrow range.
- London session
Liquidity and volume rise noticeably.
- London–New York overlap
The highest liquidity and frequent moves sit here.
- New York close
Liquidity drops; spreads can widen.
A common mistake is ignoring the spread and the sessions and looking only at the chart. A position opened in a low-liquidity hour can behave very differently because of a wide spread and sudden moves.
Regulators warn that leverage in FX can grow losses quickly and that many retail traders lose money on some leveraged FX products. Without accounting for cost and leverage, FX looks deceptively “easy.”
With the basics of FX understood, you can look at the prop-firm model that is many people’s entry point into FX. Move on to prop firms and challenges.