Forex market is where currencies are traded. USD, EUR, JPY, GBP, CHF, CAD, NZD, and AUD are the most frequent currencies. In Forex market, the most frequent currencies are “Major”. Meanwhile, the less frequent currencies are “Minor”. These currencies give insights for the investors before they bid their money in a Forex trade.
For beginners, you can start biding with a micro account for as little as $50. But before you start biding, you need to familiarize yourself with these common terminologies.
PIP: Percentage-in-point is the smallest price change that a given exchange rate can make. As most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point. In addition, there is an exception for USD/JPY. 1 pip is 0.01 cent. For instance, EUR/USD is 1,2420, so 1 pip is 0,0001. Therefore, one pip is 1/100 cent.
Base Currency: it is the domestic currency or accounting currency. The base currency is on the left side. For instance, USD/CHF. It means that the USD is the base currency. If USD/CHF is 1.6300, one dollar is 1.6300 CHF.
Cross-Currency Pair: Cross-Currency Pair is a pair of currencies traded that does not include the U.S dollar. For example, EUR/GBP or GBP/JPY. If you but EUR/GBP = buy EUR/USD and sell GBP/USD.
Currency Pair: the quotation and pricing structure of the currencies traded. The first currency of a currency pair is the “base currency”, and the second currency is the “quote currency”. For example, GBP/USD 1.7550/1.7753, USD/JPY 84.90/84.94.
Bid Price: offering price to buy a pair of currency. It means that a trader can sell their currency in the market. For instance, GBP/USD 1.8800 / 1.8803, so 1.8800 = bid price and 1.8803 = ask price. If you want to sell your GBP, the value is 1.8800.
Ask Price: offering price to sell a pair of currency. It means that a market is ready to sell a certain of a pair of currency or a trader can buy the currency. For instance, GBP/USD 1.8800 / 1.8803, so 1.8800 = bid price and 1.8803 = ask price. If you want to buy GBP, so the value is 1.8803.
Therefore, Forex is really helpful for beginners. Before you start biding your money, make sure that you are familiar with the terminologies and you can try biding your money with your brilliant strategy.