Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

The best beginners' guide to buying and selling forex

Forex is one of the most actively traded markets in the world – with a daily average trading volume of more than $6 trillion. Learn how and when to buy and sell forex online with our beginners’ guide.

Trader Source: Bloomberg

What is buying and selling in forex?

Buying and selling in forex is speculating on the upward and downward price movements of a currency pair, with the hopes of making a profit. All forex trading involves buying one currency and selling another, which is why it is quoted in pairs. You would buy the pair if you expected the base currency to strengthen against the quote currency, and you would sell if you expected it to do the opposite.

The price of a forex pair is how much one unit of the base currency is worth in the quote currency. For example, if the price of GBP/USD is 1.32000, it means that £1 costs $1.32.

Learn more about the forex market

Can I sell forex without buying?

Yes, you can sell forex without buying – this is known as short-selling, or going short. Short-selling a currency means that you believe that its price will fall, so you ‘sell’. The more the price falls, the more profit you will make.

For example, assume GBP/USD is trading at 1.3200, with a buy price of 1.3201 and a sell price of 1.3199. You think that the currency price will fall, so you short-sell the pair at 1.3199. If USD strengthens against GBP – meaning fewer US dollars are needed to buy a single pound – of the price of GBP/USD will fall, and you’ll make a profit.

How to buy and sell currency pairs  

Follow these steps to buy and sell currency pairs:

  1. Decide how you’d like to trade forex: there are two main ways to get involved: spot forex or trading forex via a broker
  2. Learn how the forex market works: forex is bought and sold via a network of banks. This is called an over-the-counter (OTC) market
  3. Open a trading account: you can open a forex trading account with us in minutes, and there’s no obligation to add funds until you want to place a trade
  4. Build a trading plan: a trading plan helps take the emotion out of your decision-making and provides some structure for when you open and close your positions
  5. Choose your forex trading platform: each of our forex trading platforms, including MT4, can be customised to suit your trading style and preferences, with personalised alerts, interactive charts and risk management tools
  6. Open your first position: choose whether you’re going to buy or sell, enter the size of your position and take steps to manage your risk

Learn everything you need to know about buying and selling forex

Remember that there are various factors that affect the price of a currency. So, you should always perform technical analysis and fundamental analysis on a currency pair before you decide to trade. Consider political and economic events, and study key price levels to form a basis for your forex positions.

Find the best forex trading strategies and tips

When to buy and sell forex

Knowing when to buy and sell forex depends on many factors, such as market opening times and your FX trading strategy. Many traders agree that the best time to buy and sell currency is generally when the market is most active – when liquidity and volatility are high.

The UK forex market is busiest just after the open of the London session at 8am (UK time). Trading will usually become less liquid at around 10am (UK time), and it will pick up again after the American markets open at around 12pm (UK time).

Discover forex trading times in the UK

Aside from market open and close times, you might also decide when best to buy and sell forex according to your individual trading strategy. Three popular FX trading strategies that can be effective ways of determining when to buy and sell currency in forex trading include:

Trend trading

Trend trading is a strategy that involves using technical indicators, such as moving averages or the relative strength index (RSI), to identify the direction of market momentum. In simple terms, it can help to establish whether the forex market is in an uptrend (bullish), a downtrend (bearish) or a sideways trend. While it can cover any timeframe, it is generally used as a mid to long-term trading strategy.

Example of a trend in trading

Trend reversal trading

In forex trading, a trend reversal is a turnaround in the price movement of a currency pair. This can be when a bullish trend turns bearish, or vice versa. You can use technical indicators such as the stochastic oscillator to establish if an FX pair is in overbought or oversold territory which might indicate that a reversal is imminent.

Example of a trend reversal in forex

Range trading

Range trading is based on the principal that a market moves consistently between two price levels for a definitive period of time, without making upward or downward progress. If you’re a range trader, you can go both long and short, depending on how the current market price is moving within the range. This is unlike trend trading, where you would go with the overall direction of the trend, and buy in a rising trend and sell in a falling one.

Example of range trading

Open a forex trading account to buy and sell FX

Remember, some traders prefer high volatility, while others do not. Regardless of your trading style and when you choose to trade forex, it’s important to follow your trading plan and have a risk management strategy in place.

Managing your risk when buying and selling forex

Forex risk management means applying a set of rules and measures to ensure any negative impact of a forex trade is manageable. If you have an effective risk management strategy, you will have greater control over your FX trade profits and losses.

Follow these steps to effectively manage your risk when trading forex:

  1. Learn everything you can about the forex market
  2. Get a grasp on derivative products and leverage
  3. Build a personalised trading plan
  4. Set a risk-reward ratio
  5. Use stops and limits to mitigate your risks
  6. Manage your emotions
  7. Keep an eye on news and current events
  8. Start with a demo account if you need more time

Explore the top risk management strategies in forex trading

Buying and selling forex summed up 

  • Buying and selling in forex means speculating on the upward and downward price movements of a currency pair
  • All forex trading involves buying one currency and selling another
  • You would buy the pair if you expected the base currency to strengthen against the quote currency, and you would sell (short) if you expected it to do the opposite
  • The price of a forex pair is how much one unit of the base currency is worth in the quote currency
  • The best time to buy and sell currency is generally when the market is most active – when liquidity and volatility are high
  • Three popular FX trading strategies that can be effective ways of determining when to buy and sell currency in forex trading include trend trading, trend reversal trading and range trading
  • You should have an effective risk management strategy in place when trading forex so that you can have greater control over your profits and losses

Start buying and selling forex online with a live trading account


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Discover how to trade forex

Learn how forex works – and discover the wide range of markets you can trade on – with IG Academy's free ’introducing the financial markets’ course.

Put learning into action

Try out what you’ve learned in this forex strategy article risk-free in your demo account.

Ready to trade forex?

Put the lessons in this article to use in a live account – upgrading is quick and simple.

  • Trade over 80 major and niche currency pairs
  • Protect your capital with risk management tools
  • Analyse and deal seamlessly on smart, fast charts

Inspired to trade?

Put what you’ve learned in this article into practice. Log in to your account now.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.