Basic concepts

 

WHAT IS FOREX?

Forex is the common abbreviation of "foreign exchange" or "currency exchange". This typically involves buying and selling currencies on the market, especially among investors and speculators. The familiar expression "buy low and sell high" applies to currency trading. A forex trader purchasing currencies that are undervalued and sells coins that are over-valued, as does a trader buys shares when a stock is undervalued and sell when the market is over-valued.

HOW TO READ A QUOTE?

Forex quotes are always presented in pairs because one currency is compared against another. This can be confusing at first, but it's pretty intuitive. For example, the EUR / USD at 1.4022 shows how much a euro (EUR) US dollar (USD).

WHAT IS A LOT?

It is the smaller size of transaction. FXCM accounts have a lot micro 1,000 currency units. The owners of the accounts can place orders of different sizes while maintaining increases in 1000 as 2,000, 3,000, 15,000, 112,000, etc.

WHAT IS A PIP?

A pip is the unit in which the gains or losses are counted. Most currency pairs, except the Japanese yen, quoted to four decimal points. The fourth space after the decimal point (in a 100th of a cent) is typically what you look for counting "pips". Each point moving in that place is a movement of 1 pip. For example, if the EUR / USD rises to 1.4022 a1.4027 it is up 5 pips.

WHAT IS THE LEVERAGE / MARGIN?

As mentioned above, all operations are executed with borrowed money. This allows you to benefit from leverage.The 100: 1 leverage allows you to trade with $ 1,000 in the market putting aside only $ 5 as a security deposit.This means you can take smaller movements in the currencies market controlling more capital in the market which effectively takes into the account.