Making Profit in Forex Trading
In Forex, a pip is the smallest price increment in Forex Trading. Pip stands for “percentage in point”. As a Forex trader, your mission is to earn as many pips as you possibly can. The more pips you earn in currency Trading the larger your profits will be. The basic goal of Forex trading is to swap one currency for another currency, then cross your fingers that the currency you bought will increase in value relative to the one you sold. Once it increases its value, you can sell it back in order to receive more of your original currency in exchange.
You have probably heard of exchange rates a million times. Exchange rate is the value of one currency in relationship to another. In other words, it is the amount of Euros that a Dollar can buy or the amount of Dollars that a Euro can buy. Since exchange rates pit one currency against another, they are quoted in currency pairs. If you wanted to know how many Euros it would take to buy one Dollar, then you would check the USD/EUR exchange rates. The first currency listed is known as the base currency and the second is known as the counter or quote currency. The exchange rate will tell how many units of the counter frequency it will take to buy one unit of the base currency and vice versa. There are several ways to make money on a Forex trade depending on whether you want to buy or sell the currency in your possession. Going short or long in Forex is just an insider’s way of saying whether you bought or sold a particular currency as part of your strategic move to make a profit. Long equates to buying and short to selling.
