Forex is the market for exchanging one currency for another, and it runs around the clock from Monday to Friday. This is how to trade forex for beginners UK traders can follow in order: how pairs are quoted, what pips and lots mean, how a spread bet turns that into £ per point, when the market moves and what it costs.
Quick answer: how do beginners trade forex in the UK?
Most UK beginners trade forex through a spread bet or CFD account. You pick a currency pair, decide whether the base currency will rise or fall against the quote currency, set a stop loss, and size the stake so that hitting the stop costs a small, fixed share of your account. Practise on a demo first.
How forex pairs work: base and quote currencies
Every forex price compares two currencies. In GBP/USD at 1.2500, the pound is the base currency and the US dollar is the quote currency: one pound buys 1.25 dollars. If you think the pound will strengthen against the dollar, you buy; if you think it will weaken, you sell.
Selling first is as normal as buying in forex, and our guide to how to short forex pairs explains how it works. Pairs fall into three broad groups:
- Majors: pairs that include the US dollar, such as EUR/USD, GBP/USD and USD/JPY.
- Crosses: major currencies without the dollar, such as EUR/GBP and GBP/JPY.
- Minors and exotics: less traded currencies, usually with wider spreads and bigger jumps.
The dollar dominates. The BIS Triennial Survey for April 2025 found that the dollar was on one side of about 89% of all trades, which is why US news moves almost every pair. Our piece on what moves the US dollar looks at that in practice. Interest rates are one of the biggest drivers; see interest rates and forex.
Forex pairs, pips and lots explained
Pips
A pip is the standard unit of price movement. For most pairs it is the fourth decimal place, 0.0001, so GBP/USD rising from 1.2500 to 1.2550 is a 50-pip move. For pairs quoted against the Japanese yen, a pip is the second decimal place, 0.01. Our guide to pips, lots and pip value covers this in more depth.
Lots
Traditional forex accounts trade in lots. A standard lot is 100,000 units of the base currency, a mini lot is 10,000 and a micro lot is 1,000. On a standard lot of GBP/USD, one pip is worth $10, which is converted back to pounds if your account is in sterling.
£ per point on a spread bet
A spread bet skips lots altogether. You choose a stake in pounds per point, and on most forex pairs one point equals one pip. At £2 per point, a 50-pip move is worth £100 either way, which makes the arithmetic much simpler for UK beginners. Always check your provider’s definition of a point. For how the two products compare, see spread betting vs CFDs.
Forex sessions in UK time
Forex trades from Sunday evening to Friday evening UK time, passing between financial centres. London is the largest: the same BIS survey puts the UK at roughly 38% of global forex trading. Approximate session times in UK time are:
- Sydney: about 10pm to 7am.
- Tokyo: about midnight to 9am.
- London: about 8am to 5pm.
- New York: about 1pm to 10pm.
The UK and US change their clocks on different dates, so these shift by an hour for a few weeks each spring and autumn. The London and New York overlap, roughly 1pm to 5pm, is usually the busiest window. Late evening and the Asian morning often bring smaller ranges and wider spreads on pound pairs.
Forex spread betting, CFDs or a forex account?
UK traders usually choose between three account types. All three are leveraged, which means you can lose money quickly and positions can be closed out automatically if your margin runs low.
| Factor | Spread bet | CFD | Forex account (lots) |
|---|---|---|---|
| How you size | £ per point | Number of contracts | Standard, mini or micro lots |
| Main cost | Spread, overnight funding | Spread or commission, funding | Spread or commission, swap |
| Small stakes | Yes, often under £1 | Yes, varies | Micro lots |
| UK tax | Usually treated differently | Usually taxable gains | Usually taxable gains |
| Leverage risk | High | High | High |
On tax, treatment depends on personal circumstances and the rules can change, so check current HMRC guidance or an adviser rather than choosing an account for tax reasons alone.
Spreads and costs
The spread is the gap between the buy price and the sell price, and you pay it on every trade. It widens around big news, at the daily rollover and in quiet hours. Positions held overnight also carry a funding charge or credit, which adds up on trades held for weeks. We break that cost down in what the spread in trading is. Holding a long and a short at once doubles these costs, as our guide to hedging in forex trading shows.
Leverage and its risk
For UK retail clients, the FCA limits leverage on CFDs and spread bets to between 30:1 and 2:1, depending on the market. Even 30:1 means a 1% move against you costs 30% of the margin used. Our guide to margin and leverage explained for beginners covers the detail.
Your first forex trade: a checklist
Run through these steps before every trade, ideally on a demo account until the process feels routine:
- Pick one major pair and learn its active hours.
- Mark the key levels on the daily chart, then read the price action around them.
- Decide the direction and the exact price that would prove you wrong.
- Place the stop beyond that price; our guide to where to place a stop loss with price action explains how.
- Set the risk, typically 1% or less, as covered in how much to risk per trade.
- Work out the stake, check the spread and any scheduled news, then place the order.
Worked example: a hypothetical GBP/USD spread bet
Example: on a £2,000 account, a trader risks 1%, or £20, on a hypothetical GBP/USD buy. The stop is 40 pips below entry, beneath a recent swing low. Dividing £20 by 40 points gives a stake of £0.50 per point.
If the stop is hit, the loss is about £20 plus the spread. If price reaches a target 80 pips away, the gain is about £40. For more on the sizing step, see how to calculate position size for any market.
Common mistakes beginners make in forex
- Sizing by margin, not by risk. The margin you can afford says nothing about what a loss will cost.
- No stop loss. A small loss turns into a large one when a news release hits.
- Trading every session. Screen time is not the same as good setups.
- Ignoring costs. Wide spreads on quiet pairs and overnight funding eat into small accounts.
- Going live too soon. A demo should prove the process before real money is at stake.
Most of these are risk problems rather than analysis problems. Our pillar on building a rules-based risk model sets out how to fix them.
Frequently asked questions
How much money do I need to start trading forex in the UK?
There is no fixed minimum, and some providers allow stakes under £1 per point. What matters is that each loss is a small share of the account, so start with money you can afford to lose.
What is a pip worth?
On a spread bet it is worth your stake: £1 per point means £1 per pip on most pairs. On a lot-based account, one pip on a standard lot of GBP/USD is worth $10.
Is forex spread betting better than CFDs?
Neither is better for everyone. Spread bets size in pounds per point and are often simpler for beginners, while CFDs size in contracts; both are leveraged and carry the same high risk of loss.
Which forex pair should a beginner start with?
Many UK beginners start with a liquid major such as GBP/USD or EUR/USD, because spreads are usually tight. Learning one pair well beats watching ten.
Next steps
Forex is one market, but the method is the same everywhere. Our guide to what price action trading is and how it works lays out the foundation.
If you want a structured route from foundations to psychology, the basics section of The Two Traders price action trading course is free.
This article is for education only and is not financial advice. Trading leveraged products such as CFDs and spread bets carries a high risk of losing money.
