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A Informative Forex Broker Review
Online Forex Trading is Quickly Becoming a Booming Business
Trading Forex With Pivot Points
FOREX What Is It And How Does It Work
Learn Currency Trade Intro to The FOREX Market
Forex broker involvement optional
Global Forex Trading The Easy Way To Make Money
What s Fibonacci Forex Trading
The Top Four Forex Brokers
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FOREX Benefits Over Futures
About Forex Trading Systems
Your Guide to Learning a Forex Trading System
The meaning of FOREX Price Charts and How to Use Them
Moving Averages Basics And How They Help FOREX Traders
ForexInterBank Forex Trading Course for Day Traders and Small Investors Focusing on Forex Pivot Point Trading
The Best Time to Day Trade the Forex Market
ForexEnterprise A Quick Look
Avoiding Forex Related Frauds And Scams
What s the Difference of Trading Mini Lots Vs Full sized Lots in Forex
Comments On Succeeding With FOREX
Forex Capital Markets And Foreign Exchange Transactions
5 Things You Must Do If You Want To Attain Financial Freedom Through Forex Trading
Advantages of Trading FOREX over Stocks and Commodities
A Couple Points You Should Know About Forex Trading
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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.
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.
About the author:
For more FREE Forex Training Articles, visit: Forex
Written by: Amber Lowery
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