How to trade forex

Last Updated Monday 20 July 2026 12:47

Forex trading steps

Step 1: Choose a currency pair to trade

We offer more than 80 currency pairs — from majors like GBP/USD, to exotics like HUF/EUR. When you trade with us, you'll be speculating on these forex pairs rising or falling in value with spread bets and CFDs. These make use of leverage, which enables you to open a larger forex trade with a small upfront deposit (called margin). However, this means your losses as well as profits can far outweigh your margin amount, as they are calculated based on the full position size, not just your margin.

Before choosing an FX pair to trade, you should carry out fundamental analysis and technical analysis on the two currencies in the pair. This means assessing how the 'base' (the currency on the left) and the 'quote' (the currency on the right) move in relation to each other.

For example, GBP/USD is currently trading at approximately 1.3400, meaning you'd have to spend $1.34 to buy £1 — reflecting the pound's current strength against the US dollar. For more on analysing currency pairs before you trade, see our guide on what is forex trading and how does it work.

Step 2: Decide whether to 'buy' or 'sell'

Once you've chosen a currency pair to trade, you need to decide whether you want to 'buy' or 'sell', based on your analysis. You would buy the pair if you expected the base currency to rise in value against the quote currency, or sell if you expected it to do the opposite. That's because a currency pair's price represents how many of the quote currency you'd have to spend to buy a single unit of the base currency.

For example, if the price quoted for GBP/USD is 1.34000, it means you'd have to spend $1.34 to buy £1 — so the pound is stronger than the US dollar. Learn more about our trading platforms and their features.

Step 3: Set your stops and limits

The forex market is particularly volatile, which is why it's important to have a plan to guide the entry and exit points of your trades. There are various stops and limits you can set to manage your risk when trading forex.

Normal stops will close your position automatically if the market moves against you — note that normal stops do not protect against slippage. Guaranteed stops will always be closed at exactly the price you specified, even if the market moves quickly or 'gaps' — you'll pay a small premium if a guaranteed stop is triggered. Trailing stops will follow positive price movements and close your position if the market turns against you. Limit orders can help you to achieve your profit target, closing your position when the price hits your chosen level.

For a full overview of risk management tools, see our forex need-to-knows guide.

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Step 4: Open your first trade

If you want to trade on the value of forex pairs rising or falling with spread bets or CFDs, open an account with us. Once you've done that, simply go to our award-winning trading platform, search for the forex pair you want to trade, enter your position size and choose 'buy' or 'sell'. There's no obligation to add funds until you want to place a trade.

Step 5: Monitor your position

Once you've opened your position, you can monitor your FX trade in the 'open positions' section of the dealing platform. You can also set price alerts to receive email, SMS or push notifications when a specified buy or sell percentage or point is reached.

Even with these alerts set, it's still important to keep up to date with the latest news and political events that could move the forex market. As of July 2026, key drivers of currency volatility include the US-Iran conflict and its impact on oil prices, Bank of England interest rate expectations, and shifting Federal Reserve policy signals. For context on how macro events affect currency markets, see our economic calendar.

Step 6: Close your trade and take your profit or loss

Once you've decided it's time to close your position, simply navigate to the 'positions' tab, select your position and click 'close'. Alternatively, just make the opposite trade to the one you opened. If you went long on GBP/USD, go short by an equivalent amount to close the position — assuming you've selected the 'net-off' option on our platform rather than 'force open'.

Forex trading examples

Forex spread bet

Forex spread betting lets you make a prediction on the direction in which a forex pair's price is heading. You'll bet an amount of money per point of movement, and if the price moves in the direction you predicted, the greater your profit — but the further it moves in the opposite direction, the greater your loss.

Forex spread bets are also leveraged. This means you'll pay a small margin when opening a trade but gain exposure to the total position size. However, it also means your losses and profits can far outweigh your deposit amount.

Spread bet prices are displayed in points — for example, if GBP/USD is trading at 1.34000, its price would be displayed as 13400.0. This makes no difference to the price you deal at or your potential profit or loss: it simply makes it easier to track per-point movements. When you trade forex with spread bets, all of your profits are completely tax-free, though tax treatment depends on your individual circumstances and can change.

Buying GBP/USD — example

You believe the pound will strengthen against the dollar from its current level of 1.34000 (buy price 1.34005, sell price 1.33995). You buy GBP/USD at £10 per point at 13400.5.

If GBP/USD rises to 1.35500 (sell price 13549.5), you close your position. The market moved 149 points in your favour, giving you a profit of £1,490 (149 x £10), before any overnight funding charges.

If GBP/USD falls to 1.32500 (sell price 13249.5), you close your position. The market moved 151 points against you, giving you a loss of £1,510 (151 x £10), plus any overnight funding charges.

FAQs

You can start trading forex with a live account or build your confidence first on our demo account, which gives you £10,000 in virtual funds to practise with. For more on the costs and tax treatment of forex trading, see our forex tax guide and spread betting vs CFDs guide.