Key Concepts for Retailer Forex Trade ? (Part 1)

1. Currency Pairs: (Char Forex Signals)
- Currency prices can only fluctuate relative to another currency, so they are traded in pairs.

2. High Leverage: (Char Forex Signals)
- Other trading concept is leverage (Margin) and floating loss.- Most retail Forex market makers permit 100:1 leverage.
- but also require you to have a certain amount of money in your account to protect against a critical loss point.
- For example, if a $100,000 position is held in Eur/USD on 100:1 leverage, the trader has to put up $1,000 to control the position.
- Forex market makers, mindful of the fast nature of forex price swings and the amplifying effect of leverage.
- Typically a trader's trading platform will show him three important numbers associated with his account: his balance, his equity, and his margin remaining.

3. Transaction Costs and Market Makers: (Char Forex Signals)
- Mostly typical standard lot is 100,000 units of the base currency.
- Market makers are well compensated for allowing retail clients to enter the forex market. They take part or all of the spread in all currency pairs traded.

What is a Pip?

- PIP stands for percentage in point.
- A pip is the smallest price increment in Forex trading.
- Prices are quoted to the fourth decimal point in the Forex market.
- For example : EUR/USD bid price rises from 2.500 to 2.4501 this represents an increase of 1 pip.