Currency trading, or forex trading, is defined by simultaneously buying in one currency and selling in another currency, which is why we speak of forex pairs. Take the four ‘mayor’ currency pairs for instance, eur/usd, usd/chf, usd/jpy and gbp/usd, the first currency of the pair is the basic currency. For traders looking for a return these mayors are of interest, over eighty five percent of all daily currency trades are traded with these four pairs. Currencies are traded on the basic principal of a bid price and an asking price. The bid price is the price at which your broker wants to buy, and the asking price is the price for which your broker wants to sell. The small difference between the two prices is the brokers’ profit. When trading in currencies you often do not have to pay your broker any kind of commission, but the broker will take a small amount of pips as a service charge, usually somewhere between three and five pips.
This is called a ‘spread’; the closer the bid price and the asking price are together, the better. Closeness of the spreads is an important criterion in selecting your forex broker. A pip is the smallest variation when trading and differs with every pair.

EUR/USD: 1.2853, fourth decimal
USD/CHF: 1.2267, fourth decimal
USD/JPY: 117.23, second decimal
GBP/USD: 150.65, second decimal

All pairs are usually determined
With a bid price and an asking price, the asking price, which is always lower than the bid price, is the price currency brokers are willing to pay and the price at which brokers are best advised to sell their currencies; the asking price is exactly the other way around. When a quote on the eur/usd is settled at 1.2.545/48 or 1.2545/8, 1.25450is the bid price and 1.2548 the asking price.

Pip is short for ‘price interest point’ and is the minimal change a currency pair can have. A change from eur/usd from 1.2545 to 1.2560 equals fifteen pips. The required margin to trade on the forex is around 1%, but standard issue contracts eur/usd are $ 100.000 and only require a 1% margin of in this case a 1000 dollars. With an amount like $10.000, one pip has a Total value of $10. Because of the high liquidity in the market, mini contracts are also available. For the currency pair eur/usd this will be $10.000, with a margin of just 1%, $100, here a pip is worth $1.

Example Long position:
Perfect Indicator indicates that the JPY, Japanese yen, is losing position against the usd. To profit from this happening we need to go to a long position, acquire a buying position, on the usd/jpy currency pair, to buy them again at a later stage, hopefully with a profit. We buy one standard issue contract at 104.22 to open the position. And the indication Perfect Indicator sent out proves to be the right one. To close the position we sell our standard issue contract at a higher level of 105.68. This makes a profit of 146 pips, 105.68 – 104.22, or 146.000 yen.

Example Short position:
Perfect Indicator indicates that the eur is losing position against the usd. To take advantage of this position we have to take a short position, a selling position, regarding the eur/usd currency pair, so when can buy them again at a later stage, cheaper.
We sell one standard issue contract at 1.3347 to open the position, the indication sent out by Perfect Indicator proves to be right. To close the position we buy a contract again but at a lower level of 1.3040. Therefore we acquired a profit of 307 pips, 1.3347 –m 1.3040, or $ 3070.

You can find a lot of information about currency trading on the internet. We advise you to open a demo account to learn more about currency trading and get acquainted with using the Perfect Indicator signals.

Attention
Please take note that we do not give trading advice, as a free subscriber you will receive buy- and sell-signals of our trading system. For specific advice related to futures, options, or other market information or to take an individual position on trades in the market, please always contact your own broker or bank. Remember that past performances are no guarantee for the future