How to Make Your First Forex Trade

Forex is the acronym used to represent the foreign exchange market. This is the worldwide market place that is used to buy and sell currencies from all countries. In order to trade on the Forex market place you are required to have a Forex account with a brokerage firm. Most firms allow you to open a Forex account without charging a fee. Brokerage firms do have requirements for the minimum amount of deposit that you have in your account before placing trades.

Forex trading is fast paced because it is an over the counter market. Unlike the New York Stock Exchange, there is no opening bell or closing bell to mark the opening hours. With Forex currency trades are made at all hours of the day and night. Trading on the Forex market requires the use of a computer that is connected to the Internet. Trades are conducted by connecting to your Forex account and entering your trades. Trades can be completed manually or through an automated system.

Manual Trades
Manual trades are completed when the trader selects a pair to trade and manually enters this trade into their computer. This trade is entered in their Forex account. With a manual system the trader has to be present to complete the trade.

Automated Trades
Since trading is open 24 hours a day some traders use automated computer systems. This system watches the market all day and night. If something happens that match criteria that has been programmed into the automated system, the computer will complete the trade automatically. The trader does not need to be present when the trade is entered.

In order to complete your first trade on the Forex market, you would select what pair of currencies that you want to trade. It is called a pair because you are buying a currency and paying for it in another currency. You would select that pair to get the current price. You select the number of shares you want to buy and place your order. That is all it takes to make a trade of foreign currencies.

Making a Forex trade usually takes only seconds to complete. Your computer system will be used to enter the trade and it will almost instantly give you verification that the trade has been completed. You can then decide when you want to sell your purchase. Hopefully you will make a profit on the sale.

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Forex Trading - Want To Know The Top 3 Most Powerful Forex Strategies For Successful Trading?

The 3 strategies that are key to turning your trading around in next to no time and if you really want to be a success at Forex Trading you need to sit up and take notice.

I'm probably no different to you and spent the longest time learning how to trade Forex looking at all the magic bullets that are touted online. The unfortunate truth is, there are no magic bullets to become a trader.

I understand how you feel, it is frustrating and annoying to get to the truth when all you want is to learn how to trade Forex without all the hype, however the good news is there are some rules of trading that, if adhered to, will have you on the right road in no time!

1.a) Money Management - BORING I know, you keep hearing about it but believe me it is a major factor to being a successful currency trader. If you don't get it you need to start, otherwise you need to turn off your charts and put Forex trading to one side until you do.

(b) Risk Reward Ratio - in its most simplistic form has to be at least 2:1, if it isn't, be a professional trader and walk away and DON'T take the trade no matter how tempting it looks, there is always another one around the corner.

(c) Capital - Don't let the scam artists fool you with claims of unbelievable returns, for example 60% per month on your initial $300 dollars, if it can be done it's by the minority of traders who may get lucky a few times and gamble, but over the long term it's not realistic, just check out the top fund managers.

2) Patience & Discipline - I know how tough it is to wait around for good set ups whether that is from the day traders point of view or a longer term traders, but again not having the discipline to wait will eventually wipe out your trading account, so learn to sit on your hands, otherwise you will pay.

3) Trade Planning - You must plan your trades in advance which goes hand in hand with number 2, what most traders get wrong is the fact that they planned the trade so they have to take the trade, this is so wrong. Out of every 10 Plans, only 2 or 3 of them will present what you're actually waiting for, this one Forex tip alone can change your Forex trading forever!

This is just the tip of the iceberg if you stick to just these 3 Forex trading strategies your trading will take on a whole new lease of life.

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How to Plan Your Forex Trading Strategies

Plan Your strategies
A foremost question every Forex trader should ask is whether they want to manage Forex accounts by themselves. The majority of retail Forex traders hold full-time position somewhere else, hospital, schools or law firms. Is it a luxury to manage my own Forex accounts?

Many people decide trade Forex without having a plan. Oh wait, they do have a plan. Becoming super rich in one month. Well, It's not trading. It's gambling. Don't wish to try your luck in the Forex market and don't ever dare to dream of becoming Buffet-rich in one month. You can make a consistent return if you have a trading plan and know how to manage your risk.

Technical Forex analysis studies about historical prices and believes history will repeat itself. technicians use different trading indicators, for example, candlestick patterns, Trend indicators, stochastics and so on. While Fundamental Forex analysis studies these macro Economic indicators, e.g., GDP, interest rate and so on. Which analysis fits to you better? Or you would rather like to combine the both analyses? How to find this out. Go to see what other traders are thinking, like joining a Forex forum.

Almost everything you hear in Forex trading actually an essential part of Technical analysis, Forex indicators, Forex signals, Forex charts, Trend Analysis, Elliot Wave and Fibonacci theory. It's really cool, Isn't it?

Technical analysis, if we can that a theory, is based on the following assumptions:

Currency pair rates follow trend in the forex market. Therefore, Forex traders are able to detect the trend by using some parameters, i.e., Forex indicators.

The historical trend will repeat themselves in the future. At the same time, historical trend patterns will repeat themselves as well. Forex charts, for example, head-shoulders pattern believe that whenever currency prices follow part the pattern, they will go through the entire pattern.

The market emotions can be observed by some forex charts. For example, observing a shooting star in an established upward trend is telling a highly reversing possibility.

Technical analysis does look overwhelming for beginners. But it's much easier to master than Fundamental Forex analysis, which studies the overall Economy situation. Considering the complexities of Fundamental analysis, it's nearly impossible for any trader to master two or three currencies.

Reliable brokers always supply numerous Forex analysis, technical and fundamental, forex news with their service. Their trading platforms usually are equipped numerous signals and forex charts.

Remembers, any Forex trader who wants to make consistent success in the Forex market cannot overlook technical Forex analysis.

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Reasons Why Forex Traders Need A Trading Plan

In forex, a solid trading plan will define how you enter and exit trades, how much you risk per trade, and what adjustments you should make. Having one will help you keep track of your trading progress better and it will help you avoid mistakes, but it requires a lot of discipline to stick to the plan. Fortunately, enough practice and screen time will equip you with the self-control needed to follow your trading plan.

In particular, a forex plan can be your best tool in making decisions while trading. You should be able to identify the various scenarios that could take place so that you can plan in advance what you will do in each situation. With that, you will simply have to follow your action steps instead of being confused with several emotions when something that you didn't expect happens. This will help you avoid panic or the fear of losing from complicating your decisions.

Aside from that, having a plan while you trade will help you identify which factors help you attain wins and which factors prevent you from making consistent profits. In doing so, you can decide to stick to those rules that make good results and adjust or discard those that don't. To be able to do this properly though, you need to keep a detailed trading journal that contains your trading decisions, adjustments, and results.

Another thing to remember is that, if your trading strategy isn't giving you good results, you need to be able to figure out if this is a result of a bad plan or poor discipline. If it's the former, then you need to consult your trading journal to identify which parts you need to adjust. One way to speed up this process is being able to distinguish justified from unjustified wins. The justified win is achieved when you follow your trade plan with enough discipline and you win the trade. The unjustified win is made when you don't follow your trade plan but still manage to win the trade. This evaluation should be part of your trade journal.

If you already have a good number of trades that you can evaluate, you can be able to tell if your losses are a result of a weak trade plan or poor discipline. In particular, having more justified wins that you have enough discipline and that your trading plan is working. However, if you have more unjustified wins, you need to make some adjustments in your current trading plan.

To learn more about how to come up with forex trading plans, visit PremiumSignals.com!

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The Three Most Common Mistakes Forex Trading Newbies Make

Join one day the stressful world of the forex market and you will soon understand that this is an information jungle in which it is very difficult to navigate in. Under a constant pressure to increase short-term returns, many traders, especially beginners make mistakes that leave them most often at the edge. In this article we will discuss the three most common mistakes a beginner should try to avoid. To survive long term, arm yourself with an adequate knowledge of the forex market to avoid wasting valuable time and finally seeing all your savings go up in smoke.

I suggest you go through three errors that seem to be most common when someone starts in forex trading.

First Mistake: Responding Too Soon on Financial News

You're excited because you spotted today an economic event that will influence the market and create high volatility. Either you have your own idea on what will happen, so you stand before the release of the figures, or you know nothing but that doesn't keep you from remaining glued to the screen, ready to draw conclusions the slightest fluctuation.

In the Forex market, economic news often causes whiplashes. Significant fluctuations can occur due to twists, undervalued reports, or simply an inaccurate perception of the situation. A lack of liquidity and management plan febrile capital leaves many traders with significant losses once it appears that the news should have been dealt with in a different way.

The slightly smarter traders take a step back and wait a clearer picture of the market situation. They remain calm, follow their management plan, responding rationally. Rather than taking your pulse, first allow a stable trend emerge. Before the first movement, make sure you have a solid business plan. This will allow you to minimize the risks by controlling and reducing the exposure of your capital in strong inversion.

Second Mistake: The Average Down

Almost all traders get to know one day or another the average down. This is a very sensitive technique that can be used effectively by experienced traders, but the beginner can quickly get into trouble by applying it.

To put it simply imagine the following situation:

- You buy EUR / USD at price X because you think the price will go up soon. - Gold continues to drop but you are convinced that it will soon go up. - Suddenly you still buy EUR / USD at a lower price to your starting X price, just to make more profit when prices will begin to rise. - By doing this you can further reduce your overall average purchase.

Unfortunately the market trend that you had anticipated did not occur, so you have to undergo a loss that could have been avoided very easily.

This kind of scenario is very common and many traders sooner or later are faced with this situation. However, averaging down, is valuable time lost and unnecessary resources put on a losing trade.

Firstly, your time would be better placed in positions with greater financial viability and prospects for long-term gain.

Second, it is difficult to replace the "invested" capital in what is essentially a sinking boat. For any capital spend, the adequate profit needs to be made in order to achieve a healthy balance. By injecting money to save a losing position, you cripple your overall capital growth.

While some may argue that many average downs were successful for most traders the final result often ended in a loss. Trends last longer than traders' liquidity and particularly traders whose horizon is very short. So the first rule is to avoid wasting your resources via average down.

Third Mistake: Risking large sums of money

Investing all your capital on one position does not mean that you will increase your chances of becoming profitable. Almost all traders who risked large sums on specific positions ended up losing. If I had to summarize this form of trading activity I would say it is more or less bad risk management. Hotheads do not last long in the forex market, or in any other investing forms of business.

A general rule shared by many traders, says that no more than 1% of your capital must be invested in a single position. This percent is to be understood in the context of the difference between the input value (position) and the output level.

Here's a management rule that you can follow in order to avoid excessive exposure of your funds:

- For a day's trading risk a maximum of 1% of your average daily profit in a month

This will help you avoid putting your capital at severe risk with any of your transactions. Whatever losses may incur, they can easily be regained in a period of about a month, leaving you enough time to make up for the lost income.

To conclude we need to stress the fact that all these mistake occur in the absence of risk management. To avoid falling into these traps, make sure you always have an alternative and realistic plan that takes into account long-term growth. In the case of the average down, have an exit strategy and know when to cut your losses. Remember, trading is all about management and not some random betting card game.

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Forex Charting - How to Be a Successful Chartist and Make Huge Gains

Here we will give you some tips on how to use Forex charts correctly and it's a fact that technical analysis works and is a great time efficient way to make big gains. Let's get started and find out how to enjoy Forex charting success...

Firstly before we begin, there are a few key errors traders make which you must avoid and they are:

Charts are not a way to predict the future! You don't predict you wait for confirmation of price action, charting is an art not a science and the simpler your Forex trading system is the better - complicate it and it will have to many elements to break.

So how do you put together a simple Forex trading system based on technical analysis? Let's take a look.

1. Support and Resistance

You will see levels on charts that support or resistance and your aim is to decide whether these levels will hold or break. You can see them on Forex charts and now you have to make money from trading these levels and next we will look at how to do this.

2. Use Breakouts

Most traders like to buy into support and sell into resistance and that's fine so long as you confirm first the level has held - don't predict. The most profitable way of trading however is to trade breaks to new highs or lows. It's a fact that all major trends start from and continue from, new highs or lows and buying these breaks can be hugely profitable.

3. Confirm Confirm Confirm

So you don't predict what may happen use a few momentum indicators to confirm if a level will hold or break and the RSI and Stochastic indicator are great for this. Look them up, as you can learn them in about 30 minutes and they will visually show you if momentum is accelerating or declining and make sure momentum supports your view.

For example, if prices reach resistance and prices turn down supported by momentum, you can go short. If prices breakout and momentum is accelerating, you can go with the break.

Always use momentum, get it to support your view and you will increase your odds of success.

4. Be Patient and Trade Longer Term

You don't get rewarded for trading often, you get rewarded for being right and you need to wait for high odds set ups. Try and focus on the longer term trends that last for weeks or months and don't trade short term.

Keep It Simple

If you were to trade using just simple bar charts and focus on key support and resistance levels, with a couple of momentum indicators to confirm your view, you will have a simple robust Forex trading strategy which will work and help you spot some high odds set ups.

Never over complicate you're trading - keep it simple, employ sound money management, trade with discipline and you could be making big money with Forex charts in around 30 minutes a day.

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Forex Trading - Fundamental Analysis

When you are involved in foreign exchange (Forex) trading, an important factor to keep in mind is that currencies and exchange rates are not uninfluenced by social, economic and environmental factors. This is essentially what fundamental analysis in Forex trading focuses on.

Information gathered from sources like the daily news regarding the status of politics, internal relations, natural disasters and other worldly events can be indicative of what may be coming up in the Forex market. These factors can assist a trader in identifying ideal times to trade currency matches or hold on to certain currencies. Even more general socioeconomic factors such as unemployment rates, fiscal policies, inflation and stock markets can foreshadow a strengthening or weakening currency.

At its core fundamental analysis in the Forex market studies the causes of the movements of currencies. However, it is not an analysis that is particularly meaningful used on its own. Traders often use fundamental analysis as a back up to support a trade that looks positive through a technical analysis.

So, more specifically, here are some of the sources and the factors you should consider when performing a fundamental analysis:

Key Political Figures: Speeches from key figures in the financial and economic government departments is often a reliable source of information in analyzing a currencies position and potential future movements. Also data and reports released publicly by these departments often highlight areas of strength and concern.

Interest Rates: Increases in interest rates often reflect intentions to reinvest in ones own economy. Such an increase encourages investors to shift their assets to that country for higher returns.

Employment/Unemployment: Increases in unemployment levels is often interpreted as a sign of a weak economy. The employment level is important indicator, as this will affect the interest rates and thus the strength of the given currency.

Trade Balance & Budgets: The level of a country's trade deficit will impact the strength of its currency. A significant trade deficit is indicative of a weak currency as this encourages higher levels of selling then buying into the currency.

Gross Domestic Product (GDP): Reported on quarterly, the GDP is an important indicator of the strength of a currency. A high GDP often precedes a high interest rate, which is a good sign for currencies.

Retail Sales: Consumer expenditure is initially represented in retail sales levels. High retail sales and consumer expenditure can reflect a stable economy with a strengthening currency.

When this information has been gathered, the following tips will assist you in helping to interpret and stay abreast of currency movements:

- Identify the indicator (as above) that is gaining the most attention, this will likely foreshadow the future price moves.

- When differences between expected and actual movement occur, watch out for the corrections in the price move.

- Pay attention to the new reviews, changes in the market tend to occur rapidly

It is also important to be aware that whenever any of these key factors are announced or occur, some brokers may close or slow down new trading orders. This is why it can be critical for a successful trader to identify the potential for such movements and get in before the "major action" begins. Missing the trade opportunity can be frustrating for a trade and should be avoided wherever possible using these analysis techniques.

Forex Trading can be a profitable and successful business. To find out more about the market and currency trading strategies http://automatictradingsystem.net hosts a number of informative articles and video tutorials on how to start in Forex Trading.
 

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Professional Forex Trading Advice

I wanted to talk to you about some professional forex trading advice. This is the market for trading currency and there is a lot of potential to profit. The reality is that most new people lose all their money. I think that paints a really big picture of the fact that new people aren't getting the right type of information. It seems like the good traders are hoarding all the good tactics and are making all the money. Well, I don't think it is necessarily hoarding, I just think there is a philosophically different approach to trading and profiting. I'm going to share with you this professional forex trading advice.

Most people enter with the whole philosophy of learning how to make big profitable trades. It seems like the most logical thing to do, but it is wrong. To be successful, you should first start at learning how to protect yourself from loss. No matter how good you get at forex, you will always have bad trades and they tend to bleed away all your profits. I've found that taking advantage of stop loss points and learning how to set them objectively has saved me so much money. Basically you decide before you make the trade, if the price goes down, you're going to sell at "x". It doesn't seem like ground breaking advice, but until you apply it like a science, you'll never see the results.

Professional forex trading advice requires you to understand that you can't do everything yourself. There is just too much information to go through. Forex graphs, data, current events and general economic information being released puts you in a battle against staying informed. You can't do it all and as soon as you recognize that the better. Having automated forex software to go through the graphs and find you good trades is important. You don't take the software's suggestions at face value, you use it as a seed to explore a potential trade.

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Learn Forex Trading - Professional Forex Training - What's the Buzz About?

So what is the buzz about trading Forex?

Well, I love what I am doing... I love it so much that I decided to demonstrate the Forex buzz with you. And if you give me ten minutes of your time, you too will understand why...

Forex is a potential solution for every single person looking to make more money; earn persistent income and take back control of their lives.

That is a huge statement, I know! But in these times of job loss, economic uncertainty and less money to make ends meet, there has to be a better solution than getting yet another job, or working twice as hard or downsizing your lifestyle.

Forex is a perfect solution! (I will explain why in a minute)

First, indulge me and take a look at your personal situation right now...

Take a minute and think about your lifestyle; your income; and how good (or challenging) life has been. Now, think about an additional monthly income that would financially take you to the next level... from getting ahead financially to being able to upgrade on whatever lifestyle choice you desire next. What is the income number you just thought of? Is it a modest $500 per month? Is it $5000 per month? Is it $20,000 per month? Now write out this statement:

(Don't be shy... be bold!) I would like to earn $_______________ more each month.

Now take a minute and think about your current job(s); current lifestyle; current free time... what options are available for you to increase your income by this amount? Do you see yourself achieving the additional income amount your just wrote down if you continue doing what you have been doing?

Will you need to (or can you) work harder? Can you ask for raise or get another job? Do you have the time (and tuition) to learn an entirely new profession?

If you are at all like me, the answers to the last three questions were no, no, and no!

So how do you get to this next level of income? For me, Professional Forex Trading has been the answer... and I think it can work for you too! I want to demonstrate how and why it has worked because I believe Professional Forex Trading is a real option for anyone interested in trading to earn additional, persistent income.

Hold on just a minute though. Before continuing, I want to make a distinction between trading and Professional Trading; and specifically how this applies in the Forex Market. There really is a huge difference! There are many people who trade, either actively or passively. But the vast majority trade without any trading education or a structured approach to the market. And their results are average at best.

Trading in general (which is non-professional trading) typically consists of:
• Acquiring as many trading tools, indicators, news and information as possible to make buying decisions (usually not selling decisions)
• Attempting to trade, but experiencing average or worse-than-average results
• Inconsistent execution leading to larger, uncontrolled losses and minimal gains
• Inconsistent risk management leading to the depletion of trading capital over time
• Years of frustration and mixed results that rarely ever achieve professional status

Perhaps that sounds familiar to you. It did for me.

Professional Trading (the kind I am now doing) consists of these keys:
1. Mastering statistically proven trading systems
2. Incorporating rigid risk management rules
3. A Business Plan optimized for the temperament and lifestyle of the trader
4. Proper Training by other Professional Trader(s)

And actually, these keys to Professional Trading, (professional meaning trading as part of your profession), are a formula that applies to every profession in the world! Consider a doctor (or lawyer, or accountant, etc...): if I gave you all of the tools, medical books and state of the art equipment doctors use today, could you walk in and perform surgery? Even if you were allowed to try, you would NOT be very good at it. Why not? What do aspiring doctors obtain before they have the confidence to perform surgery on their own? Well, you probably already know the answer. The aspiring doctor practices alongside other Professional Doctors until he builds the knowledge and skill set to take the next step and perform surgery on their own. They NEVER EVER are allowed to just 'try it themselves'. And thankfully, the medical community is structured to prevent anyone from just 'trying it on their own'.

It's a different story in the trading world, unfortunately. You can pretty much do what you want; all you need is some capital and any firm will open your account and let you begin to self-destruct!

Today, however, there are real solutions available!

If you want to create the persistent results of a Professional Trader, you MUST acquire the tools and practice alongside other Professional Traders already creating persistent results. PERIOD!

Then, only after you have the tools; have learned alongside other Professional Traders; and have practiced enough to build your own business plan, you can expect to go forward and create a persistent income stream for yourself. Without the Professional Trader by your side, you are just using your own capital to reinvent a very expensive wheel.

Great! So what does it take to learn Professional Forex Trading? (Glad you asked!)

The answer is easier than you may think... at least it is today! And that's where the buzz of Forex is building.

There are many firms touting Forex, but a relatively few firms popping up that are addressing the aspects of Learning Professional Forex Trading. One company in particular has developed an individualized structure far beyond what I have seen anywhere else. And, their approach is dedicated to applying the four keys to Professional Forex Trading mentioned above and applying them in the Forex market. Here they are again:

Professional Forex Trading consists of:
1. Mastering statistically proven Forex trading systems
2. Incorporating rigid risk management rules to preserve your capital
3. Creating a Business Plan optimized for your temperament and lifestyle
4. Proper Training from another Professional Forex Trader

Sounds nice, and if you are anything like me, the next question is, how can I possibly learn how to do this? My life is hectic as it is! (At least that is what I said.)

But you know what... there is a very real solution that has been structured to adapt to your schedule and provide you with live, professional guidance literally on-demand! (I will share where to find this environment in a moment.)

First, I want to demonstrate why Forex is the place to learn (vs. all of the other markets) and why this market is the best I have seen to learn to Professionally Trade Forex:

Forex is the easiest and most accurate market to trade.
The Forex market is the most liquid market in the world (and it continues to grow), meaning there are more people trading Forex than any other market! This makes it the easiest market for every single trader to get in and out of trades both easily and accurately.

Forex enables you to trade only when it's convenient for you!
Forex is available virtually on-demand. Forex is open for trading 24 hours a day for 5 days each week; making it available for every single trader to participate on-demand, on their schedule (and not during specific market times). This is the perfect opportunity to trade only when it's convenient for you!

Forex enables you to control 50 times your investment capital.
Forex offers traders considerable leverage for their investment; enabling traders to control 10-50 times their own trading capital. For example, a $1000 investment would control $50,000 worth of currency; compared to a $1000 investment in stock being able to control just $1000 worth of stock.

Professional Forex Trading is now available to individual traders in the convenience of their own office (or home) and at the times that most suits their schedule.

So, you may be asking 'where do I go?'...well, there lots of Forex trading firms and Forex trading systems available. Just do a search for Forex and you will have plenty to sift through. However, there is a short list of Forex environments that enable you to truly learn how to trade professionally from Professional Traders. So wherever you look, be sure to check for the four keys that must be included. Ask these questions:
- Do you provide statistically proven trading systems?
- What are your money management and risk parameters?
- What is the business trading plan that you will teach me to create?
- Who are the professional traders that will mentor me to success?
- Is there a live trading environment where the mentors are available 24 hours each day while the market is open?

Once you are trading professionally, you can take you business anywhere, but until you are a professional, if the firm or individual cannot provide good answers to all of your questions, consider going somewhere else to learn Professional Forex Trading.

There is one firm in particular that answers all four points and answers them so well, I ultimately signed up with their program. They have a live Forex trading environment open 24 hours a day and you are guided by their professional traders ever step of the way.

Remember, wherever you ultimately jump on the buzz of the Forex market, select a program most suited to your lifestyle and goals. Forex is the quickly becoming the part-time business of choice that is supplanting peoples 'day job' salaries.

Happy Trading!

For a closer look into. Professional Forex Trading, visit http://www.tradecoders.com, and sign up to watch the introductory videos. You will learn about the Forex market, and about the proper environment to learn Forex trading
 

Article Source: http://EzineArticles.com/?expert=Jim_Mandl

How to Calculate Forex Pip Value

We're all used to dollars and cents (as you're used to the currency in your country), but when you enter the Forex market, you need to learn a new term: Pip. What does it mean and how do you calculate a Forex pip value?

Pip

The pip is defined as the smallest increment a currency pair can take. For instance, for the USD/CAD pair, a pip is 0.0001. For the USD/JPY pair a pip is 0.01. A pip is also known as a point.

Recently, many Forex brokers changed their price quotes from a 4 digit quote to a 5 digits one. This practically changed the smallest increment a currency pair can move, but the pips have remained the same.

There used to be a trick that you could use with 5 digits quote to know what a pip is, but it doesn't work every time anymore:

The trick is simple: take the exchange rate and count 5 digits backwards. For instance, today, the USD/CAD is at 1.04328 (a 5 digit quote). Count 5 digits from the first: 1, 0, 4, 3, 2. The 2 is the 5th digit in the quote and it's at the 4th position after the decimal point, so a pip for the USD/CAD is 0.0001. This is also true for the EUR/GBP, EUR/USD and a lot of other currency pairs.

For the USD/JPY it's a different story. The USD/JPY exchange rate was historically over 100 Yen for a Dollar. This is why the Pip value for the USD/JPY is 0.01. However, the USD has lost value in relation to the Yen, so it's value today stands at 86.693. Even so, a pip is still 0.01, because this used to be the place of the 5th currency in the quote. This is also true for the CHF/JPY and other currencies involving the Yen.

Another way to know is to simply find out if your broker is running 4 digit quotes (in which case the pip is at the last digit) or 5 digit quotes (in which case the pip is at the position before last).

How to calculate the value of a pip

A pip is always calculated by the base currency (the second one in the pair). This is multiplied by the lot size with which you're trading. For the standard lot which has 100,000 units, the pip value for the USD/CAD is 10 CAD or $9.59 (by today's exchange rate of 1.04328 USD/CAD). This is the calculation: 10 CAD /1.04328 = $9.59.

For the EUR/USD the value of a pip is $10 which is pretty simple. For all standard lots when the USD is the base currency a pip is $10.

For a mini lot with only 10,000 units, the Pip will be 10 times less, or just $1 for the EUR/USD and $0.959 for the USD/CAD.

It's important to be able calculate the value of a Forex pip. After all, this is the most basic term in the Forex trading world.

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John Drummond works from home. He writes often on business, trading, and finances.
 

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Online Forex Trading

Thanks to the internet, interested participants all over the world can now take part in the forex market via online forex trading. Trading the forex market from the comfort of your own home is a very powerful and efficient way to make money. However, this does not mean that it is easy to make money trading the forex market, it takes much dedication, discipline, and skill, and you should learn online forex trading from a trusted and effective training source.

To succeed at trading forex online you will need to learn an effective trading strategy, this will be a strategy that has been tested and proven over many years of use. Typically, the best forex trading strategy will be one that is built around simple technical chart analysis principles, such as the art and skill of price action analysis. Many beginning forex traders believe they need to have an extremely complicated trading strategy, when in reality all these types of strategies do is confuse and complicate the process of analyzing a price chart. By learning to trade the forex market with strategies based on simplicity and minimal variables, you will have more mental energy to concentrate on the more important psychological aspect of trading; the best online forex strategies will be simple to understand and to implement.

Another important factor that contributes to online forex trading success is using a reputable forex broker to execute your trades. There are many forex brokers available on the internet, most of them are reputable and safe to use, some are not, make sure you research and check reviews before you decide on the best forex broker you will use. Ultimately when it comes to forex brokers you want one that offers low spreads, quick execution of trades, reliability, and quality technical and customer support.

One of the most important things to remember when it comes to forex online trading is that you must remain emotionally calm and in an objective state of mind. If you give in to your emotions and become an impulsive trader, you will quickly lose money in the forex market. The only cure for emotional trading is to predefine all aspects of your online forex trading; you can do this by creating a concrete forex trading plan that describes everything you will do as you interact with the market. The best online forex trading educational systems will give you a solid trading strategy that you can use to build an effective yet simple forex trading plan around.

With the widespread accessibility and low start up costs of trading forex online these days, virtually anyone who wants to can try their hand at trading the market. If you want to have a serious shot at becoming a successful forex trader, you need to use simple trading strategies, remain objective by predefining all aspects of your trading, and truly believe that you can succeed at online forex trading if you have enough discipline and patience.

Nial Fuller is a Respected Trader and Forex Coach. He Runs Forex Training and Education Website, Visit his site here Forex Trading Online
 

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