Forex Trading Pips For Peeps

When trading, pips are vital for day trading. So what are they? Price Interest Points or better known as pips are often encountered around day trading currencies. This is the representation of which the price of a particular currency is interpreted on its smallest fluctuation.

There are two kinds of trading pips; one is the static pip value and the other is the variable pip value. The static pip value is where other mayor currencies not including the US Dollar is being traded as the base currency. And the value is constant as relative to the Dollar. As per the variable pip value is where the US Dollar is the mayor currency or is the quote currency in the dominant base currency traded. For both pips, the key is always the most current exchange rate.

To be able to determine the trading pips, one must have to be able to compute the value based on the current exchange rate for the particular currency. The value of the pip entirely depends on the amount of the trade lot or contract. The most common size of a contract sold by brokers is about one hundred thousand units. In a static value pip, 1 pip would be equal to 0.0001 of the currency traded for which is the US Dollar.

To be able to get its value, one must first be able to determine the exchange rate of the mayor currency against the US Dollar then multiplied by the currency quoted by the fourth decimal place. On the other hand, the variable pip value one pip unit is equivalent to 1000 and is divided…



Source by Timothy Stevens

What Is Forex And What All You Should Know About It?

Learning about Forex Trading

What is Forex Trading? Very simply put, Forex means the Foreign Exchange Marketplace where you can trade currencies. In order to conduct trade and business, currency needs to change hands. Let us take an example. Suppose you are living in India and want to purchase a perfume from France. So it would be considered as an import and either you, or the company that you buy the perfume from is compelled to pay France in Euros. It implies that the Indian importer of the perfume has to exchange the equivalent amount of Rupees into Euros in order for the exchange to take place. Similarly, if you're traveling abroad, your local currency is of no use there because it will not be accepted, you need to convert your currency based on the prevailing exchange rates and that is done via Forex. The Forex market is actually the largest marketplace you can ever find in the world. The currency market eclipses the stock exchange market several times over.

What does exchange rate mean?

When you exchange currencies, you pay the price of a single unit of a particular foreign currency in your own currency. The amount of money in your currency which is equal to a single unit of the currency in question is the exchange rate for that currency in your country.

Why is Forex so important?

If we take statistics into account, the daily trading in Forex is estimated to be at a staggering amount of $ 5 Trillion each day. This fact alone makes it the…



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Forex Exchange Rate

Forex exchange rate is very important in dealing with foreign exchange business. Why? Because in the exchange rate, a trader will know if it is the right time to sell or buy a stock to gain the most. But before the exchange rate should come out, a good trader must know in advance how it will end or close so the sell or buy decision can be done right before the rate goes up or down. This skill is prevalent on senior advisors and / or specialists. But that does not mean that only the best traders will earn, whatever the skill level a trader has, can enhance it to become one of the best emerging traders in the business.

A trader will be equipped with all the important knowledge, skills, and attitude needed to make it big in the business. At , an important analysis tool is a platform. These are tabulations of accounts that are typically based on windows, java, web, or wireless. Depending on the choice or the tool a trader has, he will be able to acquire enough knowledge about his own stock. These tools are also jived with the rest of other tools like market researches, charts, and many others relating to exchange rate.

Being fully equipped by going through the online education provided for every trader is the best tool a trader can have though. It is there recommended that one must go through it and in less the time, a trader can fully predict the opening and closing rates that will also establish the tempo in buying or selling decisions.



Source by John F Smith

Exchange Rates – Mode of Using Money in a Foreign Market

Exchange rate signifies the price at which one country would substitute a currency for another. In other words, it refers to the assessment of one country's money in relation to the money of a different country. Exchange rates are moreover identified by the names of foreign exchange rates as well as Forex rate.

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One comes across the exchange rate issue when one is dealing with cross country circumstances be it for tour, trade or any further cause. The end result remains the similar that all these are associated with money-related troubles. The central troubles involved are using the money, saving and additional such things. In other words, persons and trade houses wish to acquire the most excellent trade price which provides them value for their money.

As looking for an exchange rate, it is very important to verify the rates presented by banks, airports and credit card companies. These days, there are various websites offering services to an array of customers from a diversity of countries.

Prior to, getting in to the exchange rate field it is very important to have an understanding regarding the worth of one's money in replacement for other country's currency. Lots of people wait for the exchange rate values to go down and after that, they buy and perhaps save when the rate rises.

The exchange rates are generally determined by either floating rate or fixed rate. A fixed rate is the rate which is the representative rate for country's currency which is set by the nation's Central Bank. The floating method in contrast refers to the diverse levels of demand and supply for that currency on the classified market.

Exchange rates calculator is the best device to be on familiar terms with a country's currency in relation to other country's currency.

Foreign exchange market, in addition, recognized as FX or forex, is the biggest market in the world. As of the soaring requirement of the foreign exchange rates, there are number of sites accessible in the forex market which gives you an idea about the real time currency exchange rates

Explain Forex Order Types

Forex Order Types

Forex Trading is the process of currency exchanging where one currency swap into another currency i.e. the exchanging of INR to dollars in the forex market, this is viewed as purchasing dollars while simultaneously selling Indian currency, this process always performs on pairs with the exchange rate managed by the forex trading market.

Making The First Forex Trade

Before taking any step in the forex market trader needs to make some basic strategies and follow the given steps.

Open a practice forex trading account is the first need to start.Most of the new traders prefer the practice account that will help to manage a real-time account, here we overcome the risk of losing our hard cash.

Do this practice for at least a few weeks or a month and then built an honest assessment of your strategy. You can update your planning with time as you get experience and continue practicing until you have the confidence to trade with the actual trading account.

Most brokers offer the given order types:

Forex Trading Advice

There are many countries and their central banks all over the world that influence the exchange rate between currencies. This exchange rate is established by central banks, such as the Federal Reserve System of the United States. The Forex is basically an abbreviation of the term Foreign Exchange. Just as the rise and fall in the stock market can be used as a means of trade, the differences in the exchange rate of two currencies is used in order to trade and reap the financial benefit of the exchange rate.

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Forex Trading Market

Forex is also known as a currency trading market or an FX. Its basic working structure and principle is based on the simple economic model of barter exchange. Supply and demand facilitates the need of each other. For example, a businessman in the US needs some amount of Euros, and at the same time another businessman in the UK needs some Dollars. The two parties that are the ends of the barter exchange transact with the help of a Forex broker, and the need for Dollars and Euros is satisfied.

The exchange rate changes every day. For example, on a day, the Euro might be equal to 1.45 US Dollars, and the very next day, it might change to 1.30 (it must be noted that these figures are just random examples and are not actual). This difference in the currencies that occurs across the world is used as a subject of trade by many individuals and organizations. There are many individuals who, just like the investors of share markets make use of the difference in values. At the same time, there are many banks, financial institutions, and people involved in import and export trade, who use it to either make or save money.

The Advice

The key advice that you should remember while undertaking FX trading is ‘sell before it falls, and buy before it rises’. If you are planning upon trading and investing, then it is important to get the right education. You might as well try out the trading course that is available on the Internet, which will give you a brief idea about the process that is involved in it. It is also important that you arm yourself with the good knowledge of Macroeconomic theories. It must be noted that, the changes in the FX are heavily governed by the Laws of Demand and Supply. Thus, it is necessary to grasp all the essential economic theories.

You will find that there are many different sources that will give you extensive tips. However, the best trick to really get the grasp of the market is to have a look at the economies that you wish to trade in. It is best that you stick to a specific pair of currencies, like USD and Euro or USD and Yen, or even Euro and Rupee. The best way to keep a tab on the behavior of such economies is to take into consideration their trends, by studying the changes in the prices of the recent past or studying the annual GDP and National Income.

There are also other economic indicators, such as prices of gold and silver or the prices of oil, that you can use to predict and forecast the increase and decrease in the currency exchange rate. You may also observe the seasonal rise in the rates of exchange, and also observe the upward and downward projections. The best strategy is to patiently observe growth, and sell before the economy starts going into a downward projection.

The Forex trading strategy is another crucial point that you need to follow. For example, select just a handful of national economies and specialize in their observations. For example, you can trade with only Asian economies or only developed economies. After a few months time, you will become an expert in trading with these economies.

Euro Key Level Economic News Release Trading Strategy

Cheyenne, WY (PRWEB) July 10, 2006

Forex traders know the importance of economic news releases and how that effects the exchange rate. A positive or negative news announcement in the US

morning session can send the EUR/USD rate up or down extremely fast. One way to capture these large moves is to use Entry Stop Orders.

Entry stop orders are an excellent way to get into a trade long or short automatically. Often if the market is moving extremely fast (due to an economic news release or geopolitical event) and you want to get into a trade, it is extremely difficult to get the price you click (live market order) because the exchange rate is moving up or down so fast. It is like trying to jump on a train that is moving at full speed.

An entry stop buy or sell order places an order with the dealing desk of your Forex clearing house to execute your order when the exchange rate touches the level you set the order at. The CMS VT platform guarantees that these types of orders will be filled.

The following link outlines the economic news releases for the week. I find it very helpful because it rates every release in terms of importance on a grading scale of A-D. A denotes very important down to D with little significance to the markets. It even lists what the market expects to happen with the briefing.com forecast.

Click Here for the Yahoo Finance Economic Calendar:

http://biz.yahoo.com/c/e.html

1. Check the economic Calendar

2. Set your entry stop buy or sell at a key level 15-30 minutes before the announcement is released. Set your stop and limit on your order by right clicking the order when it appears on your VT platform.

3. You can also “straddle” the price movement by placing a long and short entry stop or sell order (and subsequent stops) if you aren't sure which direction the news release will send the price.

This report was taken from the Euro Fractal Trading system, written by Erol Bortucene of the Day Trade Forex Team.

This unique approach to day trading the EUR/USD involves using financial Fractals and no other technical indicators, as outlined in the Euro Fractal Trading System.

Byline:

Erol Bortucene and Cynthia Macy are co-authors of 'The Day Trade Forex System: The Ultimate Step-By-Step Guide To Online Currency Trading'.

Visit:

http://www.daytradeforex.com/euro.htm

for examples of actual trades using the Euro Fractal Trading System. Learn how easy it is to learn to trade the lucrative forex market from your home pc.

For more comprehensive trading information, visit their other websites at:

http://www.daytrade-forex.com

http://www.successtrading2000.com

http://www.professionalforextradingonline.info

http://www.daytradeforex.com

http://www.daytradeforex.com/products.htm

http://www.professionalforextrading.info

http://www.successtrading2000.com/forex

http://www.shortterminvestingsite.com

Foreign Exchange Market

Globally, different currencies are traded for one another in the foreign exchange market (Forex). It is held to be the biggest financial market in the world, and which is closest to the ideal of “perfect competition” held by all the economists. The traders in include currency speculators, banks, central banks, governments, multinational corporations, and other financial organizations.

Features

The forex market is characterized by:

  • Huge trading volumes
  • 24 hour trading
  • Geographical diversity
  • Liquidity
  • Large variety and number of traders

The trading volumes exceed billions of dollars, and the market is open throughout the day, as currency is traded across the globe. This geographical diversity is the reason that a large variety of traders exist in this market. Also, the capability of different platforms such as Internet trading, creates a diverse trader base in this market. Trade in this market consists of currency or foreign exchange also creates a very high amount of liquidity.

The main feature includes the absence of a central marketplace for trading purposes. As such, the trade is carried out OTC or “Over The Counter”. Depending upon the kind of foreign exchange or currency instrument that is being traded, and the kind of trade being conducted, the prices vary. For example, the price for buying currency notes would be different from the price for buying checks. Similarly, a buy transaction exchange rate will differ from a sell transaction exchange rate.

The Top 5 currencies that are traded in this market are:

  • US Dollar (USD)
  • Eurozone Euro (EUR)
  • Japanese Yen (JPY)
  • British Pound Sterling (GBP)
  • Swiss Franc (CHF)

Currency rates are always expressed in terms of another currency, which is popular and more stable than the former one. For example, the exchange rate of the Indian Rupee is always expressed in comparison with the USD.

Factors Affecting Trade

Due to its particular features, forex rates and trading are primarily the result of the demand and supply functions of the currency.

Other than this view, the forex market is also affected by factors, which can be broadly classified into:

  • Political
  • Economic
  • Market Psychology

Political conditions of a country can affect the currency rates. Growth and economic prosperity can have a positive effect, while political upheaval like civil war can negatively affect these rates. Economic factors include things such as the budget deficit or surplus conditions, the balance of trade situation, levels of inflation, and the general trend of economic growth in that nation.

Market psychology includes the susceptibility of the forex market to rumors, perceptions of the market regarding the safety of a particular currency, and the definitive long term trends of a currency in the market.

Types

These are different types of financial instruments or trading systems, which are followed commonly in this market.

Spot

The transaction has a two day delivery date. This is a direct exchange between two currencies, often involves cash, and does not include any interest. This is the most voluminous trade that is carried out in the market.

Forward

Currencies are exchanged on a future date, which is decided by the buyer and seller. This is undertaken depending on the rate of exchange that is prevalent on that day.

Future

This is similar to the Futures trade that takes place in the stock market. This involves standard contracts, which often have maturity dates. The contract will state how much currency is to be exchanged at a specific rate and on a particular day. There often are special exchanges for this type of trading, and often includes interest costs.

Swap

This is a very unique type of transaction. In this way, two parties decide to exchange currencies with each other for an agreed length of time, and then decide to reverse the transaction at a future date.

Option

This is similar to the Options trade in the stock market. The owner of the transaction can exchange currency at a pre-agreed rate on an already decided date. This is an option or a right, but not an obligation of the Option owner.

Thus, the foreign exchange market is a very important aspect of the measurement of the financial situation of a particular country, in the global marketplace.