Key takeaways
- Currencies trade in pairs; the price shows how much of the second currency buys one unit of the first.
- Size trades from your stop-loss and risk, not from available leverage.
- Costs and timing (sessions, news) matter as much as direction.
Pairs and quotes
AUD/USD at 0.6600 means one Australian dollar costs 0.66 US dollars. Buying the pair profits if the Australian dollar strengthens against the US dollar. Brokers quote a bid (sell) and an ask (buy); the gap is the spread.
| Group | Examples | Typical spreads |
|---|---|---|
| Majors | EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, USD/CHF, NZD/USD | Tightest |
| Crosses | EUR/GBP, EUR/JPY, GBP/JPY, AUD/NZD | Wider |
| Exotics | USD/TRY, USD/ZAR, USD/MXN | Widest; can gap sharply |
Sizing
A pip is 0.0001 (0.01 for yen pairs). A standard lot is 100,000 units. On AUD/USD, 1 lot moves $10 per pip. The pips and lot sizes guide covers every pair type, and the position size calculator works backwards from your risk.
Leverage and margin
Retail leverage is capped at 30:1 on majors in the UK, EU and Australia (50:1 in the US). At 30:1, 1 lot of AUD/USD at 0.6600, a $66,000 position, requires $2,200 of margin. Leverage decides the deposit, not the risk per pip. See the margin calculator.
Timing
Each currency is most active during its home session. The London–New York overlap usually brings the deepest liquidity for major pairs. See forex market hours.
Worked example
Account $4,000, risk 1% ($40). Buy AUD/USD at 0.6600 with a stop at 0.6575 (25 pips). Pip value per lot $10, so size = 40 ÷ (25 × 10) = 0.16 lots. Margin at 30:1: 16,000 × 0.66 ÷ 30 = $352. If the target at 0.6650 is reached, the gain is 50 pips × $1.60 = $80 before costs.
Costs
Spread on entry and exit, possible commission, and overnight swap. See trading fees explained.
Who trades in the foreign exchange market?
Most turnover comes from banks, investment funds, companies paying for imports and exports, and central banks. Retail currency trading through brokers is a small slice of the total. That matters: prices are set by much larger players reacting to interest rates and economic data, not by individual traders.
Common questions
What moves AUD/USD?
Interest rate differences between Australia and the US, Australian commodity exports, Chinese demand and global risk appetite.
Can I trade forex without leverage?
Some providers allow 1:1 accounts, and currency can also be exchanged outright. Without leverage, daily moves are small.