How to Trade Forex

9
Sep

Pips

 If we are to make money we must collect pips

A single pip is the fourth decimal place of the exchange rate

EUR/USD 1.3625

We can collect pips in both a rising and falling market. Long and Short Trades

 If we think the market will move up we BUY. This is referred to as going LONG

If we think the market will move down we SELL. This is referred to as going SHORT

How can we sell something we have not yet bought? We are speculating on the movement of one currency pair against another and placing our trades based on this speculation

Examples of Pips

Take £1 = 1.6535 USD

The last two digits are what is important which are referred to as ‘Pips’

So if we were long ‘Cable’ at 1.6535 and we were looking to make 20 pips, we would be looking to close the trade at 1.6555

Some currency pairs only have 2 Decimal places for example USD/JPY 93.25. In this instance 1 USD would be equal to 93.25 Yen

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