Forex terms: Currency

Currency is the form of coinage that a country uses to trade.  England, for example uses the GBP or British Pound, whilst the USA uses the USD or US Dollar.  The currency price varies throughout the day for various different reasons, so if you buy a currency in the morning, by the time you sell it in the evening, it wont be worth the same amount as it was when you bought it.  These changes in the value of currencies against other currencies is what makes Forex trading possible.

Forex terms: What is the Exchange Rate?

The exchange rate is the rate that one currency is transferred into another’s.  The higher the exchange rate for the euro in terms of a dollar, then the lower the value is of the dollar.  You will find that some currencies are placed in certain pairs and exchange rates are commonly viewed in only certain currency pairs.

Forex terms: What is a pip?

A pip is a tiny amount that a currency changes by.  It is usually about one hundredth of a percent of the value of the currency.  If you think carefully about this, that will usually mean around 0.001 of a cent per time.  Even if the currency pair changes by 100 pips, it will only be about a cent of a change.  This is why you need to be able to make large investments at a time when you make your trades in order to see any kind of a return.