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.

If you have been in the forex market for some time, you would have come across this saying many times "the trend is your friend". Most of the time, traders who use this saying use it when they have made a loss in a counter-trading position.

Forex traders become very sad because they have lost a deposit, and again they were not part of the reverse trend movement which will have brought back the profits to the table.

In order for you to be successful with your trading, we encourage you take a look at some tecniques that will help you indentify when a trend is in place, with the use of indicators to drive your way to making reasonable profits from it. If you are a forex trader and you don't have a strategy inplace, then you might not be successful in forex trading.

The movement of prices of currencies have been shown to move in a trending pattern, because of long-term macroeconomic elements which moves these rates of exchange. These elements include interest rates, global trade imbalances, and many others.


Identifying a trend
With regards to the meaning of trend, it means a sustained market movement in a specific direction, which is either a uptrend or a downtrend. Many forex traders could give different and several meanings to what trend is. But to give a good meaning of trends, it is a predicted response to price at support/resistance levels which changes with time.

As an example, when there is an uptrend, the main visible feature is the rebound of prices when they reach levels of support, thereby creating new highs. In a downtrend, it means the same thing but in the opposite direction. As soon as you see this on a chart, it simply means there is a trend in place.


Now the major tool to identify this trend is trendline analysis. This tool (trendline analysis) is used to make an establishment of resistance and support levels for your market prices.

So in the next topic we will be talking about trendlines analysis fully, so that you can understand the use of technical indicators to identify such trends. They have worked for many forex traders, and it will surely work for you if you apply them correctly.

The application of these analysis are what guarantees you a smooth ride through your trend movement.

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.

Quoting currencies is one important part of forex trading you must understand so well enough. The currencies you trade must be well stated, and their relationship with each other, and also their worth to each other should be known.

At the beginning of your forex trading experience, it may seem complex and confusing. This confusion comes about because currencies are quoted in various ways, different from the way equities are quoted.

So understanding the quoting of currencies will become very easy for you if you understand that the base currency is the first currency that is quoted. Again you must know that value of the base currency is 1.

Let's give an example so that you can understand how it works.

If you see a USD/CAD quote of about 1.5000, this simply means that 1 USD is equal to 1.5000 Canadian dollars. Or it means that you can buy one USD with 1.5000 Canadian dollars.

Similarly, if you see the USD/JPY currency pair, first you know that the US dollar is the bse currency, and the value is 1. So for a quote of USD/JPY of 118.00, this simply means that you can buy 1 USD with only 118.00 Japanese Yen, or 1 USD is equal to 118.00 Japanese Yen.


As soon as the US dollars is the base currency, this principle works very fine. But there are some exceptions to this principle, and this is seen in the case of these 3 currencies; the British pound (GBP), the European currency unit (EUR), and the Australian dollar (AUS). So if you see a case where the British pound is the base currency, then it means the value of the GBP is 1. So in a case of the GBP/USD quote of 2.0000, this simply means that 1 British pounds is equal to 2.0000 US dollars, or 1 GBP can buy 2 USD.

Also, the rise of the base currency means that the value of that currency has appreciated against the other one. If US dollars is the base currency against the Yen, and the price goes up, it means that the US dollars is appreciating against the Yen, or you will need more Yen to buy the US dollars.

For example, if the USD/JPY quote is 118.00, and it rises to 119.00, that means the dollars have appreciated. It also means the same thing if the prices fall, that the US dollars have depreciated against the Yen.

But in the case where the base currency is not the US dollars, a rising price simply means that the US dollars is depreciating.

Forex trading in carried out in currency lots. Every lot is approximately 100,000 US dollars of foreign currency. In order to be a ble to carry out trades on Forex market, you must have a margin account with a Forex broker.

Actually, this is like a bank account from which losses will be subtracted and profits deposited. The use of this account is instant, that is as soon as you open or close a trade position, losses are subtracted and profits deposited.

There are different regulations on margin accounts depending on your Forex Broker. Many Forex broker will require about $1,000 deposit to begin day trading a currency lot. The meaning of day trading as the name implies is the opening and closing a trade position in one day.

For a long-term position, may Forex broker will require about $2,000 per lot deposit.
In contrast to stock trading and other market, you need at least 50% margin account of your intended stock trade. But in Forex trading, you can control a large lot with just a small margin account. This is done through leverage. As an example i can open a 2 lot position with just 2% of the worth value.

The execution quality of the Forex market is very perfect. Because of the liquidity of the Forex market, many trade can be opened and closed at the current market price.
Although slippage can not be avoided in Forex markets, just like all other fast moving markets, many Forex broker's software have tried to beat it. That is you are notified of your exact opening price just before execution, and you will be given the opportunity to avoid or accept the slippage.

Your trade positions are confirmed immediately, and the internet user only needs to print a copy of these confirmations for record purposes. There are also many sayings about internet Forex trading being safer than the telephone trading. This is because you see the price it is, and you can decide to accept or reject it.

Also the telephone trading also has its advantages. In the case of internet disconnection, telephone calls can be made to your Forex broker to help you close or open trades.

You can be sure that your account informations are secure because Forex brokers uses systems that are protected by firewalls.

In this article we will be seeing certain market drivers and how they affect greatly affect market prices.

1. Interest rates
You can be sure that this is one of the factors that fundamentalist look out for when they need to make analysis of market situations. When you borrow money from banks, and other places, you will certainly be expecting interest on such money. So if a country increases its interest rate, the strength of that currency increases. Also many foreign investors look out for this increase.


2. Gold prices
Another factor that drive market prices is the rising of gold prices. Gold is a commodity that is seen as an alternative to the U.S. dollars, and that has made their relationship with price interdependent. For instance, if the prices of gold increase beyond a particular level, then it should be expected to break more levels in periods to come.

Relating these figures of gold are what many fundamentalist are involve it, and practically it is fun for them.


3. Oil prices
Also, the translation of oil prices have made a significant impact in the analysis of fundamentalists. They relate this products, and they can figure out where the next market movement will be. For some companies such as airlines, the rise in oil prices means a down turn of profits for them, so equity traders can relate these products with themselves and arive at a conclusion of market movement.

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.

The word Forex was brought out of that word, but it can also be called Forex market or Forex trade. Forex can be traded all round the clock, 24 hours a day. The Forex is about the largest financial markets in the world. Even if all other financial institutions are put together, the Forex market still outruns them.

The Foreign Exchange market is a spot or cash interbank market. This market was established in 1971 when a currency began to be exchanged with other currencies. There are about 4500 currency trading institutions. These institutions consist of commercial companies, local central banks, and international banks. There is virtually nothing you can do between different countries that didn't need exchange of different currencies. Foreign currencies are needed no matter how small they appear.

The exchange of foreign currencies in local trade is called consumer foreign exchange market. The Forex exchange has many opportunities for investors, and companies depending on their goal and priority about trading. The trading of Foreign Exchange cuts across many nations, and the participation of overseas economies in Forex helps to bring down the great risks involved in international trading or investing.
When Forex was introduced, there were only very rich investors. There was no need for small investors, but in the Forex market today small investors can invest by buying and selling small units or lots of foreign currencies.

The Roles of commercial banks in Forex are as follows:

• Commercial bring out the business relationship between two people or parties.
• The carry out specified speculations about the right time to buy and sell currencies. They do this by determining the exact time the various currencies they are trading will be increasing or decreasing in value.

It is almost true that many commercial banks obtain about half of their revenue from trading currencies.

The Foreign Exchange market is very large that not one single organization can control it. Over the year, the volumes traded have grown, until it is now in excess of $1.5 trillion daily. Today, trading can be done over the telephone, or through the use of a computer, using various terminals across the globe.