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.

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.

An interest thing to do in forex is cashing in on short-term trends. It is sometimes difficult to identify a trend, and when you do not get a trend, that doesn't mean you have no traders to make that day.

If you want to use this trading strategy, you need to two time frames in other to identify this short-term trend. The first one is an overbought -oversold indicator to get a good entry point into the market, and the second is a trailing stop. This trailing stop helps you protect your profits on good and viable trades.

The trading strategies of many fores traders are that they assume that the market will stay in between a given range. But you can only give this assumptions if you use the right indicators to back up the reasons. A large percentage of the time, you will discover that the market prices moves back and forward with a resistant and support level, or randomly flunctuate. The other percentage of time, the market is seen to move in a persistent direction of price. This simply means that the trends certainly break over or above the resistant and support levels.

Well, in as much as many traders have benefitted from using this strategies, many other traders who try to exploit these trends have failed and have lost a lot of money in that process. The only way to use this strategy of cashing in on short-term trends is to be able to locate trend signals of when to enter and get out of the market.

To be successful, you need to identify these entrt points, and then also limit your losses by employing the use of good and sound risk management techniques. As a aspirant of a successful trader, you need to focus on your trading strategies and let your profits come to you, and cut your losses to the barest minimum.

As part of these informations articles given here, we will later be talking about how the system of trading works for you.

The currency market, or forex market has many opportunity for you to make money, but you also have to "opportunity" to lose money. Dealing with the major currencies which are the US dollars, Euro, Japanese yen, British pounds, Canadian dollar, Swiss franc, and the Australian dollar.

Certainly more than 85 percent of all daily trade involves the major currencies.

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.

The meaning of 'Margin' in stock is not the same when it comes to forex. They simply mean different thing.

In stocks trading you need about 50 percent margin to trade which is very high. An example is this, if the value of microsoft shares is valued at $300/share, purchasing 200 units wil require you to pay $60,000 ($300 multiply by 200 units), and when you use margin, you will pay about $30,000 for the value of those 200 units.

The rest of the money is borrowed, and interest is being paid on such money. So as you can see, margin trading in stock is quite expensive, interest focused, and not suitable for all traders.

In forex, margin trading is something more interesting. Margin is the smallest money that you are required to open a trade. When an account is opened, the deposit you pay is the margin, and it is basically 1% of the worth of the position. As an example, when you purchase about $100,000 of USD/JPY, and this is at a leverage of 100:1, the amount that is required is only 1% which is about $1,000.

Where is the other $99,999 coming from?

The other money is collaterized with the rest in your account, and another interesting thing, you will not be paying any interest. You should also be aware that when you increase your leverage, you consequently increase your risk. The only way to reduce this risk is to watch your account balance on a regular basis, and also make use of stop-loss orders to cut down losses.

Lets give you a demostration of the effect of leverage.

If you have an acount balance of $5,000, and you want to purchase the USD/CHF pair, because you think the USD will rise in value. Ok thats a good one. At a current bid/ask price of 1.2300/1.2305, which you can sell 1 USD for 1.2300, and buy CHF for 1.2305. The spread is 5 pips, take note of that.

If your leverage is 100:1, your first deposit will be $1,000 for this trade.
And if at your speculation, the rise moves from its intial cost to 1.2380/1.2385, which is considered a rise of 80 pips, you need to sell off your USD for the CHF. Now selling price will be at 1.2380. So selling your position gives you a profit of about 750 CHF. Converted to USD, you will have a profit of $605.

This calculation is arrived at by dividing the profit in CHF by the current rate (750 divided by 1.2380).

In summary, you bought a trade with $1,000, and made $605 as profit, you return is about 60%. So if you bought this trade without the use of leverage, you won't make any significant return, and it will certainly be less than 1%.

For traders who are interested in Forex, there are many advantaes that presents itself. You can take advantage of this advantages and get the best fortune out of Forex. The advantages includes:

1. Liquidity
In the Forex Exchange market today, you can be sure to get both buyers and sellers at any time of the trade.
The trade volumes that Forex makes on a daily basis surpasses the volumes of any other financial market. Liquidity for the simple man is the ability to close or open a trade position at any time of your choice. This advantage is very beneficial to all investors because you don't get stuck in a trade position. You can choose to close or open your trade position 24 a day.

2. Access
There is absolute accessibility to Forex as from 6.00 P.M. on Sunday to around 4.00 P.M. on Friday. All through these days you get a 24 hours service.
There could be fast reactions to news from Forex informations, instead of waiting for the break of the day when infact many traders have the informations already. With access to these informations, Forex traders take the opportunity of making money from the news or informations about the exchange rates of currencies, before they are brought to the general public for anouncement.

The 24 hours accessibility gives rises to Forex traders to be able to open or close trade positions based on informations at any time of the day. In the different time zones of the world, there are Forex dealers who are ready to give quotes of buy and sell.

3. Two-Way Market
Forex is a two-way market in that currencies are exchanged or traded in pairs. Examples are US Dollar/Japanese Yen, US Dollar/Swiss Franc, Great Britain Pounds/US Dollars, etc. Every trade constitute of the buying of one and the selling of the other currency. If at a point a trader believes the US Dollars will appreciate against the Japanese Yen, he can decide to buy more US Dollars and sell whenever he feels he has made his profits.

Again, another trader migh believe that the US Dollars will depreciate against the Japanese Yen, he can decide to sell more of US Dollars for the Japanese Yen. You can decide to sell a currency pair if you think the pair is going to depreciate against the base currency, or buy if you think it will appreciate against the base currency. This means that profits in Forex can be made when the market is moving up, or when it is moving down.