Forex Basic/Term

There are several Forex term that every trader must be familiar with.There're Lots,Currency pair,Quote Currencies,Base Currencies and pips.

LOTS



1. Forex lot is defined as a minimum amount of equity.

2. Forex currency is trade in the form of Lot to allow the homogeneity of the market price

3. For standard account, 1 lot is equal to USD1000

4. For mini account, 1 lot is equal to USD50

CURRENCY PAIR

1. In forex trading there are buy and sell of currency pair.

2. BUY: If you buy a currency pair for example GBP/USD, that mean you buy the base currency and automatically sell the quote currency.

3. SELL: if you sell a currency pair for exmple GBP/JPY, you actually sell the base currency, and automatically buy quote currency of that currency

4. According to world Conversion, base Currencies is more strong when compare to quote Currencies. Example: EUR / USD, USD / JPY, GBP / USD


Base currencies / Quote Currencies

Forex currency can be divide into 2 main categories which is base currency and currency quote. Each currency has two prices: a bid price at which a trader is willing to buy and an offer price at which a trader is willing to sell.

1. The base currency is the first currency in a currency pair .The rate able value is usually greater than U.S. Dollar. For example Euro (EUR) and Great Britain Pound (GBP) currency.

2. The second currency is quoted currency. The rate able value is usually lower than U.S. Dollar. For examples Japan Yen (JPY), Swiss France (CHF) and the Australian Dollar (AUS) currency.

PIPS.

If you are new to forex trading, you must first understand what pips are.


Pip is the smallest decimal value in one currency pair. For example, the buy price for the pair GBP / JPY is 1.6570. If the pair is changed to 1.6571, then the change is only 0.0001. The change of 0.0001 is equal to 1 pip.



The pips value is not constant and it depends on the pair and the type of account that you’re using. For example, 1 pip profit for the pair GBP / USD is at the same U.S. D1 (mini account) or USD10 (standard account)