FOREX Deals

1.      The currency market, or forex (FX), is the largest investment market in the world.

2.      Currency is traded in various sized lots.

3.      The micro lot is 1,000 units of a currency, a mini lot is 10,000 units and a standard lot is 100,000 units.

4.      All currency trading is done in pairs.

5.      A pip or percentage in point, is the smallest increment of trade. E.g. – If EUR/USD pair goes from 1.1234 to 1.1235, that is a one pip change (an increase/decrease by 0.0001)

6.      The eight currencies most often traded are

·         U.S. dollar (USD)

·         Canadian dollar (CAD)

·         Euro (EUR)

·         British pound (GBP)

·         Swiss franc (CHF)

·         New Zealand dollar (NZD)

·         Australian dollar (AUD)

·         Japanese yen (JPY)

7.      When you trade in the foreign exchange spot market (where trading happens immediately or on the spot), you are actually buying and selling two underlying currencies. All currencies are quoted in pairs, because each currency is valued in relation to another. For example, if the EUR/USD pair is quoted as 1.2200 that means it takes $1.22 to purchase one euro. 

8.      Every currency in the world comes attached with an interest rate set by the central bank of that currency's country.

9.      You are obligated to pay the interest on the currency that you have sold, but you also have the privilege of earning interest on the currency that you have bought.

10.  The currency pair is a key idea among the rudiments of Forex trading. Example - EUR/USD = Base currency/Quoted currency = Buying EUROS and selling USD

EUR/USD = 1.1234/1.1240 = Bid Price/Ask Price

11.  Spread = ask price - bid price

12.  Two types of spreads

a.       Fixed

b.      Floating