Forex price are quoted in pips. Pip represents "percentage in point", and this is the 4th decimal place, that is 1/100th of one percent. In EUR/USD, a 3 pip spread is usually quoted as 1.2400/1.2403. If you are familiar with the quote prices of many currencies, you will discover that only the Japanese Yen is quoted in 2 decimal places. All other currencies are quoted in 4 decimal places.

For instance, the USD/JPY 4 pip spread is quoted as 113.00/113.04. This is like 1/100th of the Yen, compared to the 1/1000th ot most other currencies.

1. Base currency
When a base currency is the US Dollars, and the currency pair goes up, then it means that the US dollars has appreciated against the quoted currency.

Example, in the USD/JPY pair, if the first is 118.30, and after a while the price becomes 119.00, then it is said that the dollar have appreciated against the Japanese yen. It can also mean that the dollar is now strong enough to purchase more Japanese yen.

But there are certain exceptions to the general rule, such as the British Pound (GBP), Euro (EUR), and the Australian dollar (AUD). Example, when you see the GBP/USD quote price as 1.9000, this means that 1 British pound can buy 1.9000 US dollars. This also applies to the EUR/USD pair, and some others.

In this type of currency pair where the US Dollar is not the base currency, when there is a rise in the price of the quote, it means the dollar is getting weaker. This is because you need more money to be able to buy the base currency, such as the Euro, Pound, and Australian dollar.

And consequently, when the rise is also going down, it means the dollar is take a rise in value. And you need less US dollars to buy the base currency.


2. Cross currency
Such currencies pair that doesn't have the US dollar are usually referred to cross currencies, but the general rule are the same. Example, in the EUR/JPY of quote price of 125.90 means that the you need 125.90 Japanese yen to purchase 1 Euro. The basic rule is the same. If you get into the Forex trading, you will see that there is always a "bid" and "ask" price.

The bid quote is the price where you can go short the base currency in a particular trade, and the ask price is the price where you can go long on the base currency on a trade.

All these will get familiar to you when you stay on Forex for a while.

These are some trade examples that will help you know that forex trading is real. You can check up the statistics whenever you want to, and also be confident to study it from time to time.

I have also learnt that examples help fores traders to set goals, and targets for their trading techniques, which is a good thing. Here are some examples for your learning.


1. The first example was between the EUR/USD pair, and it occurred in the fourth week of June 2002.

Fisrt, i want you to observe the hourly and 10-minute EUR/USD charts. Take note of when the price is above the 200-period moving averages on the two charts. On the hourly chart, the price is almost above the 200-hour moving average, and it very much means an uptrend. On the 10-minute chart, prices reman above the moving average towards the last third of the chart. So what you have to look out for is find an entry point, that is the market is within 20 points of the moving average on the 10-minute chart, and also the stochastic lines ave made a cross.

So at about 1 p.m. and the midnight on June 27, the requirements are met. That is the entry point is where the fast stochastic cross over the slow stochastic, when the indicator is below 20 points.

You see there is a buy at the 0.9883 price at about 8 p.m., and a stop loss is placed at 0.9858, which is 10 points below the 200-bar moving average. And this stop loss is trailed upwards whenever the price rises. And also the currency pair gets to its top at 0.9992, and the stop loss is now at 0.9967 where the market position was closed and a profit of 84 pips was made which is $840 profit.


2. The second example gives an illustration that is similar to the one above, but in this case it is the USD/JPY currency pair.

Take note that prices were trading mch below the 200-moving average after the 21st of June. On the 10-minute chart, the market prices went below the moving average after 10 a.m. on 27th June, which clearly indicates going short on the currency. Also observe that prices went below the 20 points of the moving average. At 5 p.m., a position was opened at 119.57, just as the fast stochastic line crossed below the slow stochastic line, when the indicator was above 80. A trailing stop was placed at 119.86, and the trade was still on till the next day, and it was closed at price 118.58 for a 99 pips profit.

The assumptions of technical analysis are that all market prices, and market fundamentals are represented on the chart. Also you don't need to see or look for the hopes, anxiety, and other factors in the chart or market data.

Also technicians have discovered that history repeats itself, and the market moves in a direction that is exactly similar or at least in a way predictable. These are referred to as signals. These signals are patterns generated by the movement of price.

So therefore, technical analysis uncovers the secrets of the future market prices after studying and observing past market prices.


Prices have been discovered to move in trend, and technicians know that they are not just random movement, they are moving in a real predictable pattern. Prices moves in three directions: sideways, up and down.

Usually, trends continue over a period of time, once they are identified. So what technicians do are to look for the possibility of a trend movement and then they buy or sell into the market.

The main components of a forex technician are the volume charts, price charts, and many other graphical representations of different market informations that can be used to measure the strength and movement of a trend. This means that to be a technician, you must be able to use many other technical tools to forecast market direction, and not just rely on price charts alone.

If you are desiring to be a technician, you have to be very disclipned. The use of these technical tools require discipline. There are cases where many traders will still hang on to a position, even when the technical analysis tells them to enter or get out. All these are what a technician to be should handle.

For example, assuming you are long on the EUR/USD pair, and you establish a stop loss at around 30 pips from your entry point. If for some reasons your expectations are not correct, and the price moves and gets to your stop loss point, you should not hold on to that position expecting it to turn around and rise. You must have a real trading plan, on where to take your profits, and cut your losses.

Don't hang on to a lossing trade.

Of course, the different currencies have their different unique qualities. As a fundamentalist, or generally a forex trader must find out these qualities and their relationships when quoted with other currencies.

This is an important thing to do in order to understand the factor that push the prices of these currencies. If you have ben trading for some time as an advanced forex trader, you will certainly know that the dollar/yen doesn't trade the same way as the dollar/swiss. There pattern of trades totally differs and so it is with all other currency pairs. In this article, you will be seeing the variations and the explanations for such variations among currency pairs.


1. The biggie
The Euro dollar is called the biggie. This currency pair is the most traded pair in the history of forex, and it has many exciting characteristics.

The EUR/USD should always be seen compared to other currency pair. For example, when there is a emerging trend in the USD/CHF, or GBP/USD, you will probably be looking out for the emergence of the break out also.

Not all indicators are also suitable for the EUR/USD pair, suggestions are that the momemtum indicator has a better change of analysis, although, this also depends on the trader.


2. The USD/JPY
The USD/JPY has also been recognized as a leading pair in forex. It records around 17 percent of total trades daily. They have the tendency to flunctuate in price in a more zig-zag fashion. But, traders are advices to study these pattern after analysing your indicators to suit your need, then opening a position to this pair may bring in some profit.


3. The USD/CHF
This pair has a very low liquidity, and thus tends to be less traded by advanced fores traders. Do not just pick a pair because prices are moving up and down, make sure you knw the relation before commiting a position.

4. THe GBP/USD
This currency pair is known as the cable. It also doesn't have a good liquidity, and it is as a result of its higher pip value.

Do not apply the same trading methods to all currencies because the differ in characteristics.

If you trade forex on a good platform, you would not need to be calculating your profits and losses with few cents and dollars, the platform is designed to automatically calculate it for you.

All you need to do is look into your account and see what's there, and if it is losses, sorry. But we expect that you will take advantage of certain forex resources to help you determine your ability and capacity to survive as a forex trader.

Calculating your profits and losses or knowing how it is calculated will enable you understand the general principles of its calculation. For a proper understanding of how this is calculated, some examples will be given so that you can have a vivid illustrations of the principles. In this forex account, this calculation was made: The current bid/ask quote for the EUR/USD is 1.2200/1.2203. This means that you can purchase 1 euro for 1.2203 dollars, and you can see 1 euro for 1.2200 dollars.

So in the case where you go long on this currency pair, that is you buy this pair, you will need to pay $122,030. This is because the size of a lot of the EUR/USD is 100,000 units. So if your anticipation and speculation is right, and your current price is now at 1.3000/13003, you have made a gain of about 800 pips. This means that the price went up with 700 points.

Now selling this currency pair will be at your bid price which is usually the lower price. Now you have to sell the 100,000 units at about $130,000.
Subtracting your initial buy price of $122,030 ($130,000 - $122,030), you get a profit of about $797. This profit is not bad for a one day trading, and with consistent planning and correct speculation, you can earn much more than that. You also have to be aware that the losses invloved in forex is very great, as you can lose all your deposit, so getting the correct planning strategy is the key.

Education first, then trading next.