Important Term Forex Trading 1

Important Term Forex Trading 1 : Ability to analyze graphs and stable currency than a basic knowledge of currency trading will be affected, they must also have a basic knowledge of merchants in foreign currency terms. Because the people who go through life without knowledge, then it is also misguided trade Forex. so, traders need to know some basic things about forex trading softness. Knowledge base associated with some important concepts:

Bid and Ask
In operation, the purchase price and the selling price of a foreign currency are presented in offering budget / purchase or bid / ask. Levels offer price you are willing to forex traders to buy as a set or offer price level forex traders are willing to sell (such as only "offer our willingness to buy or open a buy position and questions or suggestions our willingness to sell or short positions"). It is important to note that the bid price / asking each other, that is, after the purchase of currency for another currency volume.

For example, the exchange rate of USD / CHF 1.7054/1.7057 means buy USD 1 forex trader 1.7057 CHF (Swiss Franc) or sell 1 USD CHF 1.7054. So if we buy sales automatically CHF USD (Buy USD USD and CHF = loss of CHF). If we sell the USD, CHF will automatically buy (sell dollar, with USD and CHF = CHF loss of intake). In this case, the bid is the price at which we can sell the base currency (at the same time buying the currency), and the question is the price level where you can buy the base currency (at the same time selling the currency).

Pips / Spread
If you find that there is always a gap between supply and demand on prices when the supply is always lower than the purchase price. The difference between the bid price and the retail price is called the spread. This difference may be due to the Bank or Forex Traders to make profits from the sale of foreign currency at a higher price in the basket. The magnitude of the difference between the purchase price and pip or point lead entity. USD / JPY 1 pip is two decimals (0.01), while for other currencies (non-JPY) 1 pip is four decimal places (0.0001). For example, the exchange rate of USD / CHF 1.7054/1.7057, the spread of 0.0003 (3pip) for USD / JPY 122.92/122.95, spread 0.3 (3pip).

In the foreign exchange market or currency base currency, USD, 1 pip is the current exchange rate to determine the pip value will be separated. Therefore the value of a pip USD / JPY 0.01: PIP value exchange rate and USD / CHF 0.0001: the exchange rate. For example, the exchange rate of USD / JPY 122.92/122.95 buy $ 100,000 (at a price of 122.95 JPY) and a few minutes later, the exchange rate of USD / JPY 122.97/122.99 together. Over time, we have to sell it back, $ 100 000 (price of JPY 122.97).

Transactions there is a difference of 0.2 or 2 pips (122.97 to 122.95) and can be calculated pip value (0.01/122.97) x $ 100.00 = $ 8.13 per pip. With 2 pips profit of $ 100,000 transaction is $ 16.26 ($ 8.13 x 2 pips). So that the exchange rate of the base currency is USD, we need to convert the pip value in USD. For example, the pip value for EUR / USD 0.9887 per euro 0.0001011 (0.0001: 0.9887), with a transaction, for example, € 000 100

Cross Currency
In particular transaction currency, the dollar is used as the "heart" of the currency market. If the currency of another country that is not in the form of USD, the exchange is called the Cross as an example of 127.95 EUR / JPY (€ 1 equals 127.95 yen). Past, in this case, EUR / JPY could be done by comparing the EUR / USD and USD / JPY. Cross-currency international arbitration generally triangular arbitrage (exploit differences in the degree of cross linking place in three different locations) to make.

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