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If you are new to Forex, no doubt you are confused by all of the strange and unfamiliar terminology. For example, what is a pip? Also, you are probably already aware that Forex trading can be risky. How can you limit your loss and best protect your funds? This article briefly covers how currency lots are traded to help you better understand how to plan your trading strategy and manage your funds. About the Author: For more FREE Forex Training Articles, visit: Forex
In Foreign Currency Exchange (FOREX), earnings are expressed in "pips". Pip is short for Price Interest Point, also called points. Whereas the smallest denomination in USD is the penny ($.01), in Currency Exchange, funds can be traded in an even smaller denomination, $0.0001. This means that very small movements in currency prices can create large profits.
So, a PIP is the smallest unit a currency can be traded in. The actual value of a pip is not a set price. If you are trading with a standard account, a pip is worth $10. If you are trading a mini account, a pip is only worth $1.
The value of a pip changes based upon the size of your account, because the size of your account affects how much currency you can leverage. A standard full size trading account is 100,000 units of the base currency. If you are trading in USD, a standard account has a value of $100,000 USD.
A mini lot is 10,000 units of base currency. If you are trading mini lots, you can leverage $10,000. This is why a pip in a mini account is worth less than a pip in a standard full sized account.
While Forex trading allows you to leverage more funds than you actually have, this can be a double edged sword. While you can make profits on funds that you leverage (rather than own), you can also have losses amplified as well. There are several ways, however, to manage your risk when trading Forex. If you are interested in trading Forex, you should have a definite trading strategy. You must educate yourself to know when to enter and exit the market and what kind of movements to anticipate.
You can also place something known as a stop loss order. Stop-loss orders the typical way traders minimize risk when placing an entry order. A stop-loss order to exit your position if the currency price reaches a certain point.
If you are taking a long position, you would place the stop loss order below current market price. For a short position, you would place a stop loss order above current market price. This technique allows you to manage your risk and, just as the name suggests, stop your losses at a certain point.
As you can see, Forex trading can be complex, but once you understand the basic fundamental principals of how lots are traded, its starts to come together for you. Foreign Currency Trading can be quite profitable and and exciting way to invest.
Fibonacci Retracements Forex News
fibonacci retracements forex
a Fibonacci retracement from early July to August. More resistance is seen around $1.2920-35, which capped the currency in mid-August. The Australian dollar fetched $0.9150 AUD=D4 , down about 0.3 percent from late U.
Read moreFOREX-Dollar on defensive after solid U.S. payrolls - Reuters
... former Fibonacci retracement level)." On the downside, Rosenstreich observes next support levels at 1.5325, 1.5235 and 1.5115. Resistance levels are 1.5490, 1.5580 and 1.5715. © 2010 “FXstreet.com. The Forex ...
Read moreForex GBP/USD retreat from 1.5490 extends below 1.5400 - FXStreet.com
... Fibonacci retracement on the April 21 st to May 25 th upswing ahead of the U ... DailyFX provides forex news on the economic reports and political events that influence the currency market. Learn currency ...
Read moreUSDCAD Test of the 38.2% Fibonacci Retracement Ahead of the U.S. NFP Report May ... - Yahoo Finance
DXY was down 0.1 percent at 82.02 with support at 81.82 -- the 50 percent Fibonacci retracement of the index's rise from 80.085 to a high of 83.559, in August. YEN LONG POSITIONS TRIMMED The dollar also ceded ground ...
Read moreFOREX-Dollar struggles, hovers near 15-year low vs yen - Reuters India
Forex News and Events: There was considerable ... downtrend resistance (around 1.5540) and looking for a return towards 1.5325 (31 Aug low and former fibonacci retracement level). With downtrends still in vogue at ...
Read moreForex − Relief over Payrolls Supports Risk Taking...For Now - FXStreet.com
... Fibonacci retracement of its fall from its August peak around $1.3334 ... But many traders have doubts over whether Tokyo will step into the forex market now given that Tokyo could have trouble convincing other ...
Read moreFOREX-Risk currencies firm, await U.S. jobs report - Reuters
The next target for the euro is around $1.2873 -- a 38.2 percent Fibonacci retracement of its fall from its August peak of $1.3334 to its August low of $1.2588. The target after that would be $1.2923, touched on Aug ...
Read moreFOREX-Dollar on defensive after data whets risk appetite - Reuters
The next target for the euro is around $1.2873 -- a 38.2 percent Fibonacci retracement of its fall from an August peak of $1.3334 to its low of $1.2588 marked in the same month. After that, the next target its Aug ...
Read moreFOREX-Dollar, yen retain losses made on upbeat data - Reuters
... surprise in the payrolls data could move the market," said Daisuke Karakama, market economist at Mizuho ... percent Fibonacci retracement of its fall from its August peak around $1.3334 to its August low near $1 ...
Read moreFOREX-Risk currencies firm on data surprises before job report - Reuters
a low marked on Aug. 18 and after that 81.82 -- the 50 percent Fibonacci retracement of the index's rise from 80.085 to a high of 83.559, both also marked in August. The yen has been bought in the past few months as ...
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