Forex 101: building confidence in currency markets

Why forex matters to Aussie traders 🌏

If you’ve ever converted Australian dollars for a Bali holiday, you’ve taken part in the foreign exchange market, also known as forex or FX.

But behind the travel desk lies a massive global engine:

✅ The most liquid market in the world
✅ Trades over $5 trillion a day
✅ Open 24 hours, five days a week
✅ Powered by banks, businesses and individual traders

Whether you’re in Sydney, Melbourne or Perth, forex gives Australian traders access to global currency movements, with opportunities to trade round the clock.

Step 1: Understand currency pairs 💱

In forex, currencies are always quoted in pairs : one currency versus another.

For example:

• AUD/USD = Aussie dollar vs US dollar
• EUR/GBP = Euro vs British pound

The first currency is the base, the second is the quote. If AUD/USD = 0.6700, it means 1 AUD is worth 67 US cents.

🔁 Going long? You’re buying the base (AUD) and selling the quote (USD).
🔁 Going short? You’re doing the reverse by selling AUD to buy USD.

It’s a tug-of-war between economies and you’re backing one to outperform the other.

Step 2: Know your majors, minors and exotics 🧭

Most Aussie traders stick with major pairs as they’re liquid, lower cost and widely followed.

✅ Tip: If you're starting out, majors like AUD/USD or GBP/USD offer tighter spreads and plenty of daily news to track.

Step 3: Trade when the market moves 🕒

Forex is a 24-hour market and ideal for Australians who want flexibility.

The four major trading sessions are:

• Sydney
• Tokyo
• London
• New York

💡 Best time for Aussie traders?

Midday to late evening AEST, when the London and New York sessions overlap. This window sees the most liquidity and volatility which is ideal for spotting price action setups.

Step 4: Get to know pips and lots 📊

Price moves in forex are measured in pips which is usually the fourth decimal point.

So if EUR/USD moves from 1.1050 to 1.1055, that’s a 5 pip increase.

To benefit from these small moves, trades are placed in lots:

You don’t need to fund the whole amount up front – thanks to leverage, you can open larger positions with a smaller deposit. Just remember: gains and losses are magnified, so risk management is key.

Step 5: What moves forex markets? 📈

Currencies rise or fall based on how investors feel about a country’s economy.

For the Aussie dollar, keep an eye on:

• RBA decisions on interest rates 🏦
• Iron ore and commodity prices ⛏️
• China’s economic health as our largest trading partner 🇨🇳
• Unemployment and inflation data from the ABS 📊
• Risk sentiment globally as the AUD is a “risk-on” currency, meaning it tends to rise when markets are feeling confident.

💡 Tip: Economic calendars are your friend. Plan around major data releases and central bank announcements to avoid surprises.