Our upcoming service. Promotion offers ruining now

Our upcoming service. Promotion offers ruining now

package 01 : $25  ( for 1st 2 month our promotion offer only $15 )
pips target 500-700 .
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Market overview and analysis to help you understand the market and learning about fx market
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Package 02 : $50 ( for 1st 2 month our promotion offer only $15 )
Pips target 1000+
Account balance required minimum $500
Market overview and analysis to help you understand the market and learning about fx market
Weekly chat support and chance to talk with main trader ( who give the signal) about trading every Saturday or Sunday
if any month profit goes under 300 pips than next month 50% discount and if we close with no pips or less than 300 pips or negative pips then no charge until we give till +300 pips .
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Our forex course details

Forex course for basic to intermediate.

One on one class

Course duration 3 month

1st month theory and basis lesson about forex market mt4

2nd month understanding your mentality and behavior with market

3rd  month practice with me in live market.

Course layout not same for all, every class, time, lesson depends on student capacity .

If you follow my lesson and study properly and practice with me , give you 100% then you can earn 8%-10%  of your investment . (Minimum investment requirement $1000 for you own live trading account when you start your real trading)

Course fee $500. Advance payment.

In practice month I’ll share some of my trade so students can make some profit from it . You can expect 50% to 70% of course fee, sometime its 100% of course fee.

FX advance course.

One on one class

Course duration 3 month

1st month theory and basis lesson about fx market mt4

**understanding your mentality and behavior with market

** develop your trading psychology

2nd month create a trading plan with your expected return of your investment.

Some secret idea that help you to earn from trading,

We don’t share the secret info before course start .

3rd month  practice with me on live market.

Course layout not same for all ,  every class , time ,lesson depends on student capacity

If you follow my lesson and study properly and practice with me, give you 100% then you can earn 8%-10% of your investment. (Minimum investment requirement $1000 or more for you own live trading account when you start your real trading)

Course fee $1000. Advance payment.

In practice month I’ll share some of my trade so students can make some profit from it. You can expect 50% to 70% of course fee, sometime its 100% of course fee.

Pro trading course .

Course fee $3000

Account balance required more then $2000

One on one class

Course duration 6 month

1st month theory and basis lesson about fx market mt4

2nd and 3rd month understanding your mentality and behavior with market and practice .

4th to 6th month practice and making your trading business plan .

This course include lots of secret way and info to earn from forex .

Course layout not same for all, every class, time, lesson depends on student capacity

In practice month I’ll share some of my trade so students can make some profit from it . You can expect 50% to 70% of course fee, sometime its 100% of course fee.

We also offer pro trading course and customize course

for more details feel free to contact with us

instagram : anik_blinkfibo

skype : blinkfibo (anik rahman)

Types of Forex Orders

The term “order” refers to how you will enter or exit a trade. Here we discuss the different types of forex orders that can be placed into the forex market.

Be sure that you know which types of orders your broker accepts. Different brokers accept different types of forex orders.

There are some basic order types that all brokers provide and some others that sound weird.

Forex Order Types

Market order

A market order is an order to buy or sell at the best available price.

For example, the bid price for EUR/USD is currently at 1.2140 and the ask price is at 1.2142. If you wanted to buy EUR/USD at market, then it would be sold to you at the ask price of 1.2142. You would click buy and your trading platform would instantly execute a buy order at that exact price.

If you ever shop on Amazon.com, it’s kinda like using their 1-Click ordering. You like the current price, you click once and it’s yours! The only difference is you are buying or selling one currency against another currency instead of buying a Justin Bieber CD.

Limit Entry Order

A limit entry is an order placed to either buy below the market or sell above the market at a certain price.

For example, EUR/USD is currently trading at 1.2050. You want to go short if the price reaches 1.2070. You can either sit in front of your monitor and wait for it to hit 1.2070 (at which point you would click a sell market order), or you can set a sell limit order at 1.2070 (then you could walk away from your computer to attend your ballroom dancing class).

If the price goes up to 1.2070, your trading platform will automatically execute a sell order at the best available price.

You use this type of entry order when you believe price will reverse upon hitting the price you specified!

Stop-Entry Order

A stop-entry order is an order placed to buy above the market or sell below the market at a certain price.

For example, GBP/USD is currently trading at 1.5050 and is heading upward. You believe that price will continue in this direction if it hits 1.5060. You can do one of the following to play this belief: sit in front of your computer and buy at market when it hits 1.5060 OR set a stop-entry order at 1.5060. You use stop-entry orders when you feel that price will move in one direction!

Stop-Loss Order

A stop-loss order is a type of order linked to a trade for the purpose of preventing additional losses if price goes against you. REMEMBER THIS TYPE OF ORDER. A stop-loss order remains in effect until the position is liquidated or you cancel the stop-loss order.

For example, you went long (buy) EUR/USD at 1.2230. To limit your maximum loss, you set a stop-loss order at 1.2200. This means if you were dead wrong and EUR/USD drops to 1.2200 instead of moving up, your trading platform would automatically execute a sell order at 1.2200 the best available price and close out your position for a 30-pip loss (eww!).

Stop-losses are extremely useful if you don’t want to sit in front of your monitor all day worried that you will lose all your money. You can simply set a stop-loss order on any open positions so you won’t miss your basket weaving class or elephant polo game.

Trailing Stop

A trailing stop is a type of stop-loss order attached to a trade that moves as price fluctuates.

Let’s say that you’ve decided to short USD/JPY at 90.80, with a trailing stop of 20 pips. This means that originally, your stop loss is at 91.00. If the price goes down and hits 90.60, your trailing stop would move down to 90.80 (or breakeven).

Just remember though, that your stop will STAY at this new price level. It will not widen if market goes higher against you. Going back to the example, with a trailing stop of 20 pips, if USD/JPY hits 90.40, then your stop would move to 90.60 (or lock in 20 pips profit).

Your trade will remain open as long as price does not move against you by 20 pips. Once the market price hits your trailing stop price, a market order to close your position at the best available price will be sent and your position will be closed.

Weird Forex Orders

“Can I order a Grande extra hot soy with extra foam, extra hot split quad shot with a half squirt of sugar-free white chocolate and a half squirt of sugar-free cinnamon, a half packet of Splenda and put that in a Venti cup and fill up the “room” with extra whipped cream with caramel and chocolate sauce drizzled on top?”

Ooops, wrong weird order.

Good ‘Till Cancelled (GTC)

A GTC order remains active in the market until you decide to cancel it. Your broker will not cancel the order at any time. Therefore, it is your responsibility to remember that you have the order scheduled.

Good for the Day (GFD)

A GFD order remains active in the market until the end of the trading day. Because foreign exchange is a 24-hour market, this usually means 5:00 pm EST since that’s the time U.S. markets close, but we’d recommend you double check with your broker.

One-Cancels-the-Other (OCO)

An OCO order is a mixture of two entry and/or stop-loss orders. Two orders with price and duration variables are placed above and below the current price. When one of the orders is executed the other order is canceled.

Let’s say the price of EUR/USD is 1.2040. You want to either buy at 1.2095 over the resistance level in anticipation of a breakout or initiate a selling position if the price falls below 1.1985. The understanding is that if 1.2095 is reached, your buy order will be triggered and the 1.1985 sell order will be automatically canceled.

One-Triggers-the-Other

An OTO is the opposite of the OCO, as it only puts on orders when the parent order is triggered. You set an OTO order when you want to set profit taking and stop loss levels ahead of time, even before you get in a trade.

For example, USD/CHF is currently trading at 1.2000. You believe that once it hits 1.2100, it will reverse and head downwards but only up to 1.1900. The problem is that you will be gone for an entire week because you have to join a basket weaving competition at the top of Mt. Fuji where there is no internet.

In order to catch the move while you are away, you set a sell limit at 1.2000 and at the same time, place a related buy limit at 1.1900, and just in case, place a stop-loss at 1.2100. As an OTO, both the buy limit and the stop-loss orders will only be placed if your initial sell order at 1.2000 gets triggered.

In conclusion…

The basic forex order types (market, limit entry, stop-entry, stop loss, and trailing stop) are usually all that most traders ever need.

Unless you are a veteran trader (don’t worry, with practice and time you will be), don’t get fancy and design a system of trading requiring a large number of forex orders sandwiched in the market at all times.

Stick with the basic stuff first.

Make sure you fully understand and are comfortable with your broker’s order entry system before executing a trade.

Also, always check with your broker for specific order information and to see if any rollover fees will be applied if a position is held longer than one day. Keeping your ordering rules simple is the best strategy.

DO NOT trade with real money until you have an extremely high comfort level with the trading platform you are using and its order entry system. Erroneous trades are more common than you think!

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a short readout

Major and Minor Currencies

The eight most frequently traded currencies (USD, EUR, JPY, GBP, CHF, CAD, NZD, and AUD) are called the major currencies or the “majors.” These are the most liquid and the most sexy. All other currencies are referred to as minor currencies.

Base Currency

The base currency is the first currency in any currency pair. The currency quote shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.6350, then one USD is worth CHF 1.6350.

In the forex market, the U.S. dollar is normally considered the “base” currency for quotes, meaning that quotes are expressed as a unit of 1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British pound, the euro, and the Australian and New Zealand dollar.

Quote Currency

The quote currency is the second currency in any currency pair. This is frequently called the pip currency and any unrealized profit or loss is expressed in this currency.

Pip

A pip is the smallest unit of price for any currency. Nearly all currency pairs consist of five significant digits and most pairs have the decimal point immediately after the first digit, that is, EUR/USD equals 1.2538. In this instance, a single pip equals the smallest change in the fourth decimal place – that is, 0.0001. Therefore, if the quote currency in any pair is USD, then one pip always equal 1/100 of a cent.

Notable exceptions are pairs that include the Japanese yen where a pip equals 0.01.

Pipette

One-tenth of a pip. Some brokers quote fractional pips, or pipettes, for added precision in quoting rates. For example, if EUR/USD moved from 1.32156 to 1.32158, it moved 2 pipettes.

Bid Price

The bid is the price at which the market is prepared to buy a specific currency pair in the forex market. At this price, the trader can sell the base currency. It is shown on the left side of the quotation.

For example, in the quote GBP/USD 1.8812/15, the bid price is 1.8812. This means you sell one British pound for 1.8812 U.S. dollars.

Ask/Offer Price

The ask/offer is the price at which the market is prepared to sell a specific currency pair in the forex market. At this price, you can buy the base currency. It is shown on the right side of the quotation.

For example, in the quote EUR/USD 1.2812/15, the ask price is 1.2815. This means you can buy one euro for 1.2815 U.S. dollars. The ask price is also called the offer price.

Bid/Ask Spread

The spread is the difference between the bid and ask price. The “big figure quote” is the dealer expression referring to the first few digits of an exchange rate. These digits are often omitted in dealer quotes. For example, the USD/JPY rate might be 118.30/118.34, but would be quoted verbally without the first three digits as “30/34.” In this example, USD/JPY has a 4-pip spread.

Quote Convention

Exchange rates in the forex market are expressed using the following format:

Base currency / Quote currency = Bid / Ask

Transaction Cost

The critical characteristic of the bid/ask spread is that it is also the transaction cost for a round-turn trade. Round-turn means a buy (or sell) trade and an offsetting sell (or buy) trade of the same size in the same currency pair. For example, in the case of the EUR/USD rate of 1.2812/15, the transaction cost is three pips.

The formula for calculating the transaction cost is:

Transaction cost (spread) = Ask Price – Bid Price

Cross Currency

A cross currency is any pair in which neither currency is the U.S. dollar. These pairs exhibit erratic price behavior since the trader has, in effect, initiated two USD trades. For example, initiating a long (buy) EUR/GBP is equivalent to buying a EUR/USD currency pair and selling GBP/USD. Cross currency pairs frequently carry a higher transaction cost.

Margin

When you open a new margin account with a forex broker, you must deposit a minimum amount with that broker. This minimum varies from broker to broker and can be as low as $100 to as high as $100,000.

Each time you execute a new trade, a certain percentage of the account balance in the margin account will be set aside as the initial margin requirement for the new trade based upon the underlying currency pair, its current price, and the number of units (or lots) traded. The lot size always refers to the base currency.

For example, let’s say you open a mini account which provides a 200:1 leverage or 0.5% margin. Mini accounts trade mini lots. Let’s say one mini lot equals $10,000. If you were to open one mini-lot, instead of having to provide the full $10,000, you would only need $50 ($10,000 x 0.5% = $50).

Leverage

Leverage is the ratio of the amount capital used in a transaction to the required security deposit (margin). It is the ability to control large dollar amounts of a security with a relatively small amount of capital. Leveraging varies dramatically with different brokers, ranging from 2:1 to 500:1

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Forex Swaps

What is Swaps?

Swaps are interest rate differentials and commonly relevant in the currency markets. Of course, brokers who offer CFD’s also levy swap rates. If you are an intra-day trader where you close your trades by the end of the day, swap rates are irrelevant. However, if you are a swing trader and tend to keep your position open over a period of time, you must pay attention to the swap rates as they can add or subtract a small, yet significant amount to your trade.

As the currency markets involve a simultaneous buying or selling of one currency to another, the guiding interest rate difference for the currency pair you are trading determines the outcome. For overnight positions, you are either levied a positive swap (the swap rate is added to your trade) or a negative swap (the swap rate is subtracted from your trade).

Swap rate is defined as the overnight rollover interest for open positions

Swap rates or rollover rates are typically charged on an overnight basis and a triple rollover or triple swap rate is applied every Wednesday.

 

How are swap rates determined?

In theory, when you buy a currency with higher interest rate and sell a currency with lower interest rate, you are charged a positive swap. Likewise, when you buy a currency with lower interest rate and sell a currency with higher interest rate, you are charged a negative swap.

Let’s say you want to buy AUDUSD.

We know that the interest rate in Australia is at 2.5% while the interest rate in the US is at 0.5%. So when you buy AUDUSD, you are charged 2.5 – 5 = 2% swap rate. However, when it comes to actual forex trading, you won’t be paid the exact amount. The swap rates are determined by the rate the liquidity providers are willing to pay and thus could differ from the actual rates.

 

How to check the rollover rates you are charged?

If you are trading with the MT4 platform, it is easy to check the swap rates for the currency pairs. To determine the swap rates, right-click on a currency pair in the ‘Market Watch’ window, click on ‘Symbols’ and expand the ‘Forex’ folder to view the list of currency pairs. Then select a currency pair and click ‘Properties’ to view the swap rate details.

Screenshot (21).png

Viewing Swap Rates in MT4

swap-rates.png

Swap Rates, MT4

In the above example, we are viewing the swap details for EURAUD currency pair. The swap information can be understood as follows:

For a contract size of 100,000 (or 1 standard lot) the swaps are charged as follows:

For long positions (Buying EURAUD):  Swaps charged are -$1.17

For short positions (Selling EURAUD): Swaps charged are $0.89

So depending on your contract size, the swaps are adjusted accordingly. For example if you were trading a mini lot selling EURAUD, you are charged $0.089 for overnight positions. If you held on to your trade for 7 days of the week, you are charged $0.089 x 4 + $0.089 x 3 (On Wednesdays) giving you a total positive swap of $0.596

The reason why you are charged a triple rollover on Wednesdays is because no rollovers are applied for positions held over the weekend (Saturdays and Sundays)

 

Should you really be bothered about swaps/rollovers?

For inter-day traders, rollovers aren’t much of an issue, unless you hold your positions overnight and for a prolonged period of time. In such an event, it pays to look at the swaps you are being charged and ensure that it doesn’t eat too much into your profits.

Swaps can be an additional way to earn interest on open positions, especially if a positive swap is added to your position. This way, you can at the very least manage to cover any commissions or spreads that your broker might charge you and thus virtually trade for free. Negative commissions however do add small yet additional amounts to the already paid costs of trading.

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Forex Slippage

What is slippage?

Slippage is one of those dreaded moments of trade execution when price exceeds a stop or a limit order or even a market order. Slippage is usually seen during periods of extremely high or low volatility and generally occurs during key news releases or during off market hours and occurs both in equity and forex markets and causes detrimental problems to traders.

Slippage is defined as the difference between the expected price and the actual executed price.

In the stock markets, slippage often occurs during market gaps. So if you intended to trade a particular price but the market gaps then your order is filled at the best available price, thus completely wrecking your trade risk/reward ratio. Of course, slippage is good when your target price is executed at a better price than the one intended, giving you a couple of extra pips in profit. But that is not always the case.

slippage-gaps.png

Slippage during Gaps

In the forex markets, slippage can occur both due to gaps or due to large (usually institutional) orders which tend to move the markets by a good 20 – 30 pips with all the orders in between being executed at a new (or best available) price. Slippage can also be seen during major breakout price levels, especially if a currency has been in consolidation for an extended period of time and has attracted a lot of attention from traders looking to trade the breakout range.

Slippage – An example

Take a look at the example below:

slippage.png

Slippage Example 

 

Assuming that you wanted to place an entry at the low of the Green candle (end of the highlighted area) with take profit a few pips below the entry, the trade would have resulted in a slippage. The big bearish candlestick dropped like a rock before retracing some of that move. Due to lack of orders at your entry price, your order would have been executed much further away from your intended price level.

As you can see, the problem with slippage is that your order is triggered a different price than the one you intended it to be executed at. This not only increases your risk but also reduces the reward as well thus making it a very unfavorable trade.

 

Types of Slippage

Slippage can be classified into Positive and Negative Slippage, which is best explained with an example:

You place an order to trade at 1.3150.

Positive Slippage occurs when your Buy trade is executed at 1.3120 (giving you an additional 3 Pips in your pocket)

Negative Slippage occurs when your Buy trade is executed at 1.3180 (taking away 3 pips from your intended entry price level)

 

Can slippage be avoided?

Unfortunately, the answer is No. Regardless of the forex broker you trade with, slippage is something that a trader will experience at some point in their trading journey. Contrary to general opinion, slippage doesn’t indicate that your broker is playing tricks on you (although it is possible with Market maker brokers). It is essential to understand the market conditions under which slippage occurred. It is perfectly normal to experience slippage during important news releases such as the US NFP data or Central bank interest rate changes, where volatility and wild price swings are part and parcel of the trade.

While slippage shouldn’t really be cause for concern, traders can ensure to avoid slippage as much as possible by ensuring that trades are triggered either before or a few minutes after a news release happens. Although this can ensure that you are not a victim of slippage, depending on where your stops and limits are place, it could be possible for price to move in either direction and just take out your trade (either at a bigger stop level or at a higher take profit level).

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What is a Lot in Forex?

In the past, spot forex was only traded in specific amounts called lots. The standard size for a lot is 100,000 units. There are also a mini, micro, and nano lot sizes that are 10,000, 1,000, and 100 units respectively.

Screenshot (17).png

As you may already know, the change in currency value relative to another is measured in “pips,” which is a very, very small percentage of a unit of currency’s value. To take advantage of this minute change in value, you need to trade large amounts of a particular currency in order to see any significant profit or loss.

Let’s assume we will be using a 100,000 unit (standard) lot size. We will now recalculate some examples to see how it affects the pip value.

  1. USD/JPY at an exchange rate of 119.80(.01 / 119.80) x 100,000 = $8.34 per pip
  2. USD/CHF at an exchange rate of 1.4555(.0001 / 1.4555) x 100,000 = $6.87 per pip

In cases where the U.S. dollar is not quoted first, the formula is slightly different.

  1. EUR/USD at an exchange rate of 1.1930(.0001 / 1.1930) X 100,000 = 8.38 x 1.1930 = $9.99734 rounded up will be $10 per pip
  2. GBP/USD at an exchange rate or 1.8040(.0001 / 1.8040) x 100,000 = 5.54 x 1.8040 = 9.99416 rounded up will be $10 per pip.

Your broker may have a different convention for calculating pip value relative to lot size but whichever way they do it, they’ll be able to tell you what the pip value is for the currency you are trading is at the particular time. As the market moves, so will the pip value depending on what currency you are currently trading.

Depending on your account equity and leverage, the maximum lot size can vary as well as the pip value for 1 pip as shown in the table below.

Screenshot (18).png

Risk Management and Lot size

The lot size that is used to trade new positions will vary based on your risk aversion profile as well being defined by the trading strategy you follow. Most beginners usually tend to randomly make use of various lot sizes on whims and fancies. Having an understanding of the risk management and the lot size therefore can be greatly beneficial.

For example, one of the common risk management strategies is not to risk more than 2% of account equity. Going by this logic, assuming that a trader has $100,000 account equity then maximum allowed amount to risk would be $2000. Based on the risk information, we can deduce the pip value deviation as shown in the table below.

Lot Size Pip Deviation Value
100,000 (1 Lot) 200 Pips $2000
10,000 (0.1 Lot) 2000 Pips $2000

 

As evident from the above table we can notice that depending on the lot size opened the amount of leeway that can be given vastly increases. A 0.1 lot offers much more flexibility compared to 1 lot when it comes to both risk management and pip deviation.

Which lot size is best?

While the answer to the above can vary from one trader to another, it is always advisable to choose a forex broker that offers micro lots. Some forex brokers usually offer a mini lot as the minimum standard lot based on the account equity with a minimum deposit of $10,000 and above. In conclusion, understanding lot size is important to managing risk in forex trading. Therefore, choose the lot size that you trade with carefully.

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What is Spread?

What is “Spread” in Forex trading?

Screenshot (16).png

Spread is the difference between the buy quote and the sell quote. It is basically the earning of a broker. Brokers earn either through spread or commission.

Example:

To understand more clearly, consider the following example

spread2.png

The spread, in the above EUR/USD price, is 1.4 pips .which is the difference of the buying rate (1.35640) and the selling rate (1.35626).

Types of spread

Retail brokers normally offer two types of spread that are;

  • Fixed Spread
  • Floating Spread

Let’s discuss each one by one.

What is the fixed spread?

It is a predetermined spread offered by a broker. A detailed list showing the amount of the fixed spread, on various currency pairs, is usually found on the broker’s website. Fixed spread normally ranges from 0.3 to 3 pips on majors and 2 to 50+ pips on crosses.

What is floating spread?

It is a real-time spread offered by the market. Brokers, who gave traders a direct access to the liquidity providers, usually offer the floating spreads. The amount of floating spreads may vary depending upon the situation in the market.

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What is a pip?

The word “pip”, initially going back to an acronym PIP which means Point In Percentage, is now an absolutely normal word, one of the most frequently used by traders and investors in Forex industry.

A pip is the smallest unit of currency rate change. While trading in the Forex market, you will have to closely monitor the currency rates and how they change. You will be able to do so easily using the Market Watch panel of your MetaTrader 4 terminal:

pips-what-is

You have probably noticed that the panel shows the currency exchange rate, bid and ask, which is constantly changing, and this rate is usually a fraction consisting of an integer number and some numbers that follow after the point. Now, one pip represents one ten-thousandth of the currency rate, though for JPY and some other rates it is one-hundredth. Thus, the amount of pips reflects how much the price changed and, eventually, how much you are profiting or losing.

Let’s look on the screenshot below:

quote-pips

Here you can see the EUR/USD currency rate, which right now is 1.3873. If it moves one pip up, it’ll be 1.3874, if one pip down, 1.3872. So, this is, as said above, the minimum change reflected in the currency pair, one ten-thousandth of the rate or the fourth digit after the point (for JPY rates, it will be the second digit).

How to Calculate Pip Value?

Now that we know what a pip is, you may ask: so what’s next? Why should I need those pips?

The answer is that you should need them to know your profit and loss. In the Forex market, profits and losses are generally measured by pips, so you would often hear traders say “I made a 150-pip profit” or “This was a 240-pip loss”. To convert the amount of pips into the amount of cash and to know exactly how much money you won or lost, you must first learn how to calculate the pip value.

 

The general formula for that is:

Position size/10,000 (for any rate except that involving JPY)

Position size/100 (for a JPY rate)

Now, there are three possible position sizes:

1) Standard lot (when you trade 100,000 units of base currency)

2) Mini lot (10,000 units of base currency)

3) Micro lot (1,000 units of base currency)

Thus, if we buy a EUR/USD standard lot, we get 100,000/10,000=10. The result is always in counter currency (the second one in the pair), so here we get that 1 pip of EUR/USD costs 10 American dollars.

Let’s take another example. Suppose we bought a EUR/GBP micro lot; what will be the pip value?

Applying our easy formula, we now get 1,000/10,000=0.1, i.e. 0.10 British pounds (10 pence). Now you know that, say, if you make a 300-pip profit while trading this pair, it will be 300*0.10=30 pounds.

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How to Make Money Trading Forex

How To Make Money Trading Forex

In the forex market, you buy or sell currencies.

Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.

The object of forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold.

Example:

Screenshot (15).png

*EUR 10,000 x 1.18 = US $11,800

** EUR 10,000 x 1.25 = US $12,500

An exchange rate is simply the ratio of one currency valued against another currency. For example, the USD/CHF exchange rate indicates how many U.S. dollars can purchase one Swiss franc, or how many Swiss francs you need to buy one U.S. dollar.

How to Read a Forex Quote

Currencies are always quoted in pairs, such as GBP/USD or USD/JPY. The reason they are quoted in pairs is because in every foreign exchange transaction, you are simultaneously buying one currency and selling another. Here is an example of a foreign exchange rate for the British pound versus the U.S. dollar:

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GBP/USD forex quote

The first listed currency to the left of the slash (“/”) is known as the base currency (in this example, the British pound), while the second one on the right is called the counter or quote currency (in this example, the U.S. dollar).

When buying, the exchange rate tells you how much you have to pay in units of the quote currency to buy one unit of the base currency. In the example above, you have to pay 1.51258 U.S. dollars to buy 1 British pound.

When selling, the exchange rate tells you how many units of the quote currency you get for selling one unit of the base currency. In the example above, you will receive 1.51258 U.S. dollars when you sell 1 British pound.

The base currency is the “basis” for the buy or the sell. If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency. In caveman talk, “buy EUR, sell USD.”

You would buy the pair if you believe the base currency will appreciate (gain value) relative to the quote currency. You would sell the pair if you think the base currency will depreciate (lose value) relative to the quote currency.

Long/Short

First, you should determine whether you want to buy or sell.

If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader’s talk, this is called “going long” or taking a “long position.” Just remember: long = buy.

If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called “going short” or taking a “short position”. Just remember: short = sell.

Bid/Ask

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“How come I keep getting quoted with two prices?”

All forex quotes are quoted with two prices: the bid and ask. For the most part, the bid is lower than the ask price.

The bid is the price at which your broker is willing to buy the base currency in exchange for the quote currency. This means the bid is the best available price at which you (the trader) will sell to the market.

The ask is the price at which your broker will sell the base currency in exchange for the quote currency. This means the ask price is the best available price at which you will buy from the market. Another word for ask is the offer price.

 

The difference between the bid and the ask price is popularly known as the spread.

On the EUR/USD quote above, the bid price is 1.34568 and the ask price is 1.34588. Look at how this broker makes it so easy for you to trade away your money.

If you want to sell EUR, you click “Sell” and you will sell euros at 1.34568. If you want to buy EUR, you click “Buy” and you will buy euros at 1.34588.

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