Forex Market Hours Q Q Forex Market Hour Forex Market Hour Hour Szh Aviso De Curriculums Nosepin Kanti In India 429216 Forex Market Hour What is Forex?

All forex quotes have two prices attached to them, one is a bid price, and the other an ask price.

The bid price� – if you want to SELL the base currency, then you would click on the bid price.

The bid price is the price at which the other party is willing to buy the base currency you want to sell in exchange of the quote currency.

The ask price� – if you want to BUY the base currency, then you would click on the ask price.

The ask price is the price at which the other party is willing to sell the base currency to you in exchange for the quote currency.

The� BID� price is always lower than the� ASK� price and the difference between the two is known as the SPREAD.

The spread is the difference in price between buying and selling the base currency – this difference is charged to the client and paid to the Market Maker

Going long or going short is just trader lingo for buying or selling.
As long as you remember� LONG = BUY� and� SHORT = SELL� then you’re half way there.
The next bit is a bit trickier…
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When to go Long and when to go Short in FX

"Going long"� in FX terms is buying the base currency and selling the quote currency. It is what you would do if you thought the base currency was going to rise.
E.g. EUR/USD = 1.2500
If you thought that EUR was going to rise, you would “go long” meaning that you would buy EUR with the hope that you would be able to sell it for a higher price once it has risen.
You go long Euro @ 1.2500
Euro rises in value;� EUR/USD = 1.2700
Your Euro is now worth $1.27 instead of $1.25

"Going short"� in FX terms is selling the base currency and buying the quote currency. It is what you would do if you thought the base currency was going to fall.
E.g. EUR/USD = 1.2500
If you thought that EUR was going to fall, you would “go short” meaning that you would sell EUR with the hope that you would be able to buy it for a cheaper price once it has fallen.
You go short Euro @ 1.2500
Euro falls in value;� EUR/USD = 1.2300
Your Euro is now worth $1.23 instead of $1.25

You’ve probably heard them a million times; “PIPs” and “LOTs” may be little but in the trading world they’re a BIG thing. You won’t understand trading until you understand them.

What the pip!?

PIP stands for “percentage in point” and is the smallest possible increment in a quote.

Example:� USD/GBP has a rate of 1.2121 a PIP here would be 0.0001.
USD/JPY has a rate of 119.69 a PIP here would be 0.01.

So a PIP is essentially the last decimal place of quotation, most currency pairs will have a PIP being equal to 0.0001 as they are usually quoted to 4 decimal places. This isn’t always the case however, as we can see from the example above.

One of the first concepts you need to understand as part of your Forex trading training are standard lots and micro lots; what are they and what’s the difference between them?

What is a Forex lot?

A standard forex lot is equal to 100,000 units which is $100k if you are trading in dollars and the average pip size for a standard lot is $10 per pip. Put simply if you’re down 10 pips with “Sir Standard” then you’ve made a $100 loss.

Standard lots in forex are usually for institutional sized accounts; we’re talking big rollers, who should have $25,000 or more to make trades using standard lots
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What is a Forex micro lot?

So let’s get real, if you’re thinking of starting Forex Trading, you have to start small and work your way up. Micro lots are good for beginners who need to get to grips with Forex trading. Unlike standard forex lots, which are worth $100k, a micro lot is the equivalent to $1000 worth of the base currency you want to trade. Similarly, unlike standard lots, [where 1pip=$10] 1 of a pip in a micro lot is only worth 10 cents. So if you’re down 10 pips, then that’s only a 1 dollar loss.

Now that we know what a pip is, we know that it is just a teeny amount, so you need to trade a LOT for these tiny PIPs to really make a difference.

'Leveraging lets you magnify your profit potential, at the risk of greater losses, through allowing you to control a relatively large asset for a fraction of its cost'

Example:� 0.5% margin deposit means you are trading 200 times leverage, for example;

Buying 1 lot of GBP/USD @ 1.5700 with a margin requirement of 0.5% will cost you $500.
The margin requirement means that you can trade a volume of $100,000 in the market.

Through leverage trading you can take advantage of very small pip movements in the market by trading very large volumes. Don’t worry if you do not fully understand "Leverage" yet, we’ll go into more detail about it in some of the later modules.

Show me the money!

Now that you understand what a pip is and what a lot is, you need to know why you learnt about them in the first place.

We need pips and lots to work out our profit and loss; so here are the basics of your Ps and Ls.

Remember how we spoke about DIRECT and INDIRECT Forex quotes before? Well here’s where you can put your new knowledge to work!

There are two rules for calculating your profit and loss in forex, and its all about the dollar.

Whenever you have a direct quote [where the quote currency is USD] you can calculate your profit and loss by using the following formula

P/L = (SELL PRICE - BUY PRICE) x STANDARD LOT SIZE x NUMBER OF LOTS

Remember that the standard lot size is $100,000 and for mini lots the standard size will be $10,000
Example:� You buy 2 lots of EUR/USD at 1.5554 and sell at 1.5559
P/L = (1.5559 – 1.5554) x 100,000 x 2 = $100

Whenever you have an indirect quote [where the quote currency is NOT USD] you can calculate your profit and loss by using the same formula.

Example:� You buy 1 lot of USD/AUD at 1.0465 and sell at 1.0471
P/L = (1.0471 – 1.0465) x 100,000 x 1 =� 150 AUD

CAREFUL:� the profit figure stated here is in AUD, not USD. It is important to remember that with indirect quotes (where USD is not the quote currency) you need to convert the profit and loss figure to USD by dividing by the relevant exchange rate.

You have 150 AUD;� divide by the sell price� [because you’re selling AUD and buying USD]
150 AUD/1.0471 = 143.25 USD