Forex: The Simple Strategy on Trading Currency Successfully - Step by Step Guide on Building Wealth Trading on the Foreign Exchange Market (Forex Trading, Options Trading, Investing) by Tim Harris

Author:Tim Harris [Harris, Tim]
Language: eng
Format: epub
Publisher: First Class Publishing
Published: 2016-03-24T18:30:00+00:00

USD Dollar as the Quote Currency

EUR/USD. If the currency value is equal to 1.2658, the pip value in Euro can be computed as 0.0001 divided by 1.2758 or 0.000078. You can compute for the pip value in US dollar as 0.000078 multiplied by 1.2758 or 0.0001. With a standard lot of 100,000 units, the total pip value is equivalent to $10 (computed as 0.0001 multiplied by 100,000).

No matter what the base currency is (CHF, AUD, or NZD), the ultimate pip value will always be $10.

The most common order types are market orders and limit orders. You can enter or exit a particular trade position by issuing a “market order” that will allow you to purchase or sell your currencies at present market prices. You need to be extra cautious when issuing market orders, because the forex market can move so fast that the market price at the time your market order is issued and at the actual time of the completion of the buy or sell transaction may vary. This variance is also referred to as “slippage” and can happen in a matter of just a few minutes or even seconds. A slippage can have a potential impact on your transaction, which can result in you losing or gaining a number of pips. Slippage is normally avoided when you transact your forex trading online, because the execution or completion of your market order can be completed instantaneously or in a just a few seconds depending on the speed of your Internet.

You can place a “limit order” which can allow you to automatically buy or sell a particular currency when its price reaches a specific level or limit. For instance, you can place a limit order that will automatically buy a currency when its market price drops below the “limit-order price” that you set, or you can automatically sell a currency when its market price becomes higher than the limit-order price that you set. Slippage risk does not occur with limit orders because your order is technically generated by the computer. Forex traders normally place a limit order when they anticipate that the market price of a currency will eventually recover after a certain economic or political event.

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