Lesson 1 – What is Forex and how does It work?

///Lesson 1 – What is Forex and how does It work?

Lesson 1 – What is Forex and how does It work?

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Know your forex terms

Before we delve any deeper into the possibilities that exist in the Forex market, we need to go over some basic Forex market terms.

Pip: A pip (percentage in point) or point, is usually the smallest unit of measurement in the Forex market. Most currency pair quotes are carried out four decimal places—i.e. 1.4500. When you work with Alpari quotes are carried out to the 5th decimal place to provide better pricing. The 5th decimal place represents fractional pips. If the exchange rate of a currency pair moved from 1.45000 to 1.45100, we would say that the price moved up 10 pips. You make money when the pips move your way in a trade.

Note: Any exchange rate that contains the Japanese yen as one of the currencies will only be carried out three decimal places.

Currency Pair: We wouldn’t have a Forex market if we weren’t able to compare the value of one currency against the value of another currency. It is this comparison that drives prices. Forex contracts are always quoted in pairs. The Euro vs. the U.S. dollar (EUR/USD) is the most heavily traded currency pair. The U.S. dollar vs. the Japanese yen (USD/JPY) is another popular pair.

The following is a list of the most common currency pairs, their trading symbols and their nicknames:

Euro vs. U.S. dollar (EUR/USD): “The Euro”

Great Britain Pound vs. U.S. dollar (GBP/USD): “Pound,” “Sterling,” or “The Cable.”

U.S. dollar vs. Swiss franc (USD/CHF): “The Swissie
U.S. dollar vs. Japanese yen (USD/JPY): “The Yen”
U.S. dollar vs. Canadian dollar (USD/CAD): “The CAD,” or “Loonie”
Australian dollar vs. U.S. dollar (AUD/USD): “The Aussie”
New Zealand dollar vs. U.S. dollar (NZD/USD): “The Kiwi”

50 Comments

  1. Jo Jo April 27, 2017 at 8:22 pm - Reply

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  15. Lincoln C Mitchell April 27, 2017 at 8:40 pm - Reply

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  27. Terrence Mathews April 27, 2017 at 8:57 pm - Reply

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  40. Lukas Novotny April 27, 2017 at 9:08 pm - Reply

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  41. Penny Stock Wolf April 27, 2017 at 9:08 pm - Reply

    Good explanations of the basics but Forex is for suckers.

  42. nisshobdo niyoti April 27, 2017 at 9:12 pm - Reply

    Forex is the abbreviated form of foreign exchange. Forex is the market where basically traders can trade currencies against each other. However, this video is explaining so good what is forex and how does it works. Though it is not with details but at least viewer can get the clear idea of foreign exchange. I am a forex trader and I can see this market with many possibilities. And I’m trading with ECNCAPITAL.

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  45. FX Parallel World April 27, 2017 at 9:13 pm - Reply

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  47. Phiwe Mbongwa April 27, 2017 at 9:14 pm - Reply

    interesting video.. thank you

  48. Faridul Islam April 27, 2017 at 9:14 pm - Reply

    Thank you very much for your basic instructions! When I was
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  49. Jon McBrine April 27, 2017 at 9:14 pm - Reply

    I noticed that forex doesn’t allow me to trade all the currency pairs. Is there a company that does in the U.S.? Are there any companies that would allow me to trade all the currencies and other stuff like the sp 500, gold, stocks. I don’t want to use nadex.

  50. Jocelyn April 27, 2017 at 9:16 pm - Reply

    Thanks for the helpful & easy to understand lecture.

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