Forex:

Forex is Foreign Exchange market where one currency is traded for another.

Here in Forex, Currencies are traded in Pairs such as EUR/USD, GBP/USD etc.

In Forex there is no time factors as , It will end up either by reaching at Take Profit or Stop Loss.

Forex can be traded 24hrs a day and 5 days a week.

Example:

EUR/USD = EURO will be our base currency & USD will be our quote currency.

EUR/USD = 1.1390 (EURO= 1.1390 * USD).

In FOREX we have 2 opportunities (BUY, SELL).

BUY :

If the market is going upwards, You are in profit.

SELL :

If the market is going downwards, You are in profit.

FOREX Quotes:

Bid :

The price at which brokerage is willing to buy the base currency in exchange for the quote currency. (Trader’s Selling Price)

Ask/Offer :

The Price at which the brokerage is willing to sell the base currency in exchange for the quote currency. (Trader’s Buying Price)

Note: Bid is usually lower than Ask.

Spread :

It is the difference between Bid & Ask price.

BUY or (long)=

Open with ASK Price & Closes with BID Price

Sell or (short)=

Open with BID Price & Closes with ASK Price

Price Range:

High Price:

It conveys the record of highest price at a particular timeframe from opening to closing of that candlestick.

Low Price:

It conveys the record of lowest price at a particular timeframe from opening to closing of that candlestick.

Opening Price:

Its conveys the open price of the market of any currency pair in a certain timeframe.

Closing Price:

It conveys the close price of the market of any currency pair in a certain timeframe.

PIP & Lot Size:

PIP (Point):

A Pip is the smallest price move that a given exchange rate makes based on market convention.

For Calculating Pip we will consider 4th and 2nd place of digit after decimal conditions apply.

Calculation of Pip:

Buy = Current Price - Ordered Price.

Sell = Ordered Price – Current Price.

Ex: EUR/USD* = 1.1390 (Current Price)

(Buy) Pip = 1.1390 - 1.1370 = .0020 = 20 Pips profit.

Ex: GBP/JPY* = 145.00(Current Price).

(Sell) Pip = 145.20 - 145.00 = .0020 = 20 Pips profit.

NOTE:* = All currencies pair except JPY will be Consider at 4th place of digit after decimal. Where JPY will be always considered after 2nd decimal point while calculating pip.

LOT Size:

Lot Size: It is the smallest amount/ quantity for exchanging the currencies.

The common size of Lot Volumes are ;

1) Standard Lot: 1 Lot = 100,000 units

2) Mini Lot: .1 Lot = 10,000 units

3) Micro Lot: .01 Lot = 1000 units

Standard Lot (100,000 units) : In 1 Standard Lot 1 pip equal $10 profit and loss. If a trader closes 10 pips profit/loss= 10*10= $100 profit/loss

Micro Lot (10,000 units) : In 1 Micro Lot 1 pip equal $1 profit and loss. If a trader closes 10 pips profit/loss= 10*1= $10 profit/loss

Mini Lot (1000 units) : In 1 Mini Lot 1 pip equal $.1 profit and loss. If a trader closes 10 pips profit/loss= 10*.1= $1 profit/loss

Order Types Terminologies:

Market Order:

It means order at the current market price.

Stop Order and Pending Order(Limit Order):

Orders to open Buy or Sell only the price set is reached or hit.

Buy Stop:

Buy above Current market price. (Buy order must be HIGHER than current Market price).

Sell Stop:

Sell below Current market price. (Sell order must be LOWER than current market price).

Buy Limit:

Buy below Current market price. (Buy order must be LOWER than current Market price).

Sell Limit:

Sell below current market price. (Sell order must be HIGHER than current market price).

Leverage:

It is borrowed capital to increase potential return. Leverage is commonly available in the ratio of , Example; 1:50, 1:100, 1:250, 1:500

Margin:

Good Faith deposit required to open an order.

Margin is temporarily held by brokerage until the order is order is closed/settled. Keep in mind that margin is held by yoor broker until the order is closed. Right after the position is liquidated, the margin will be credited back to your balance.