Forex, which is short for Foreign Exchange, is another term for currency trading. The goal of forex is try to profit by trading the ever-changing currency exchange rates, such as the Euro versus the U.S. Dollar.Read more: http://foxviet.net/intro-to-forex-currency-trading/#ixzz0RBsaTtQ2One of the most popular currency pairs is the EUR/USD, which tracks the Euro against the U.S. Dollar. If the EUR/USD is at 1.5000, that means one Euro will get you 1.5000 U.S. Dollars. One thing that’s interesting about these exchange rates is that they are relative to two countries. If the Euro gets “stronger”, the rate goes up to 1.5785, for example, because you can buy more Dollars. If the Dollar gets stronger, the rate will drop because the Euro will buy fewer Dollars. However, if both the Euro and the Dollar get stronger (or weaker) by the same amount, the rate won’t really change!
Similar to Stock TradingCurrency trading actually has many similarities to stock trading. Many people are familiar with how stock trading works: find a price quote for a company using its symbol, then buy that symbol at a low price and sell it later at a higher price hopefully. Forex is actually very similar: get a quote for a symbol like EUR/USD, buy it at a lower rate like 1.4000 and then sell it at a higher rate like 1.4050.
Meet the PipSince the exchange rates change by such a small percentage, a term called the pip is used to describe changes in rates or profits. For example, if the GBP/CHF (British Pound versus Swiss Franc) goes from 1.7000 to 1.7001, it has increased by 1 pip, and an increase to 1.7100 would be 100 pips because for this pair one pip is 0.0001. However, for a rate like 95.00 for the USD/JPY, the pip represents 0.01, so 95.01 would be a 1-pip gain while 96.00 would be a 100-pip gain. This just describes the rate differences. To calculate your dollar gains, you need to factor in the lot size (see below).Read more: http://foxviet.net/intro-to-forex-currency-trading/#ixzz0RBshcgMP
Similar to Stock TradingCurrency trading actually has many similarities to stock trading. Many people are familiar with how stock trading works: find a price quote for a company using its symbol, then buy that symbol at a low price and sell it later at a higher price hopefully. Forex is actually very similar: get a quote for a symbol like EUR/USD, buy it at a lower rate like 1.4000 and then sell it at a higher rate like 1.4050.
Meet the PipSince the exchange rates change by such a small percentage, a term called the pip is used to describe changes in rates or profits. For example, if the GBP/CHF (British Pound versus Swiss Franc) goes from 1.7000 to 1.7001, it has increased by 1 pip, and an increase to 1.7100 would be 100 pips because for this pair one pip is 0.0001. However, for a rate like 95.00 for the USD/JPY, the pip represents 0.01, so 95.01 would be a 1-pip gain while 96.00 would be a 100-pip gain. This just describes the rate differences. To calculate your dollar gains, you need to factor in the lot size (see below).Read more: http://foxviet.net/intro-to-forex-currency-trading/#ixzz0RBshcgMP
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