Alpari (US)
Language
-
New to Markets?
- Analyst Reports
- Technical Reports
-
Alpari Autochartist
- Economic Calendar
- Video Tutorials
- Web Broadcast
-
Market Analysis Guide
- Glossary
-
Calculation Tools
- Historical data for MT4
Regulation
Alpari (US), LLC is registered with the CFTC as a Futures Commission Merchant and is a member of the NFA - Member ID: 0379678.
LATEST NEWS
Intro to Forex Basics
The Foreign Exchange Market (Forex) is the arena in which a nation's currency is exchanged for that of another at a mutually agreed rate. It was created in the 1970's when international trade transitioned from fixed to floating exchange rates, and is now considered to be the largest financial market in the world because of its huge turnover.
All currencies are traded in pairs and each is assigned with an abbreviation. Here are some of them:
| Abbreviation | Currency |
| EUR | Euro |
| USD | US Dollar |
| GBP | British Pound |
| JPY | Japanese Yen |
| CHF | Swiss Franc |
| AUD | Australian Dollar |
| CAD | Canadian Dollar |
| NZD | New Zealand Dollar |
The "Base" currency is the first currency in the pair. The "Quote" currency, or "term" currency is the second currency in the pair.
| Base currency |
Quote currency | Rate |
| USD | / JPY | =120.25 |
This abbreviation specifies how much you have to pay in the quote currency to obtain one unit of the base currency (in this example, 120.25 Japanese Yen for one US Dollar). The minimum rate fluctuation is called a point or a pip.
Most currencies, except USD/JPY, EUR/JPY, CHF/JPY and GBP/JPY where a pip is 0.01, have 4 digits after the period (a pip is 0.0001), and sometimes they are abbreviated to the last two digits. For example, if EURUSD is traded at 1.2389/1.2391 the quote may be abbreviated to 89/91.
The currency pairs on Forex are quoted as the Bid and Ask (or Offer) prices:
| Bid | Ask | |
| USD / JPY = | 120.25 / | 120.28 |
Bid is the rate at which you can sell the base currency, in our case it's the US dollar, and buy the quote currency, i.e the Japanese Yen.
Ask ( or Offer) is the rate at which you can buy the base currency, in our case the US dollar, and sell the quote currency, i.e. the Japanese Yen.
Spreads are the difference between the Bid and the Ask prices.
Pip is the smallest price move a currency can make. Also known as a point. e.g. 1 pip = 0.0001 for EUR/USD, and 0.01 for USD/JPY.
The currency Rate is the value of one currency expressed in terms of another. The fluctuation rate depends on numerous factors including the supply and demand on the market and/or open market operations by a government or by a central bank.
1.0 lot size for different currency pairs:
| Currency | 1.0 lot size | 1 pip |
| EURUSD |
EUR 100,000 |
0.0001 |
| USDCHF |
USD 100,000 |
0.0001 |
| USDJPY | USD 100,000 |
0.01 |
| GBPUSD |
GBP 100,000 |
0.0001 |
| AUDUSD |
AUD 100,000 |
0.0001 |
| USDCAD |
USD 100,000 |
0.0001 |
| EURGBP |
EUR 100,000 |
0.0001 |
| EURCHF |
EUR 100,000 |
0.0001 |
| EURJPY |
EUR 100,000 |
0.01 |
| GBPJPY |
GBP 100,000 |
0.01 |
| GBPCHF |
GBP 100,000 |
0.0001 |
| EURCAD |
EUR 100,000 | 0.0001 |
| EURAUD |
EUR 100,000 |
0.0001 |
| USDSGD |
USD 100,000 | 0.0001 |
| NZDUSD |
NZD 100,000 |
0.0001 |
| CHFJPY |
CHF 100,000 |
0.01 |
| EURNZD |
EUR 100,000 |
0.0001 |
| AUDJPY |
AUD 100,000 |
0.01 |
| AUDNZD |
AUD 100,000 |
0.0001 |
| AUDCAD |
AUD 100,000 |
0.0001 |
| AUDCHF |
AUD 100,000 | 0.0001 |
| CADCHF |
CAD 100,000 |
0.0001 |
| CADJPY |
CAD 100,000 | 0.01 |
| NZDJPY |
NZD 100,000 | 0.01 |
| USDNOK |
USD 100,000 |
0.0001 |
| USDSEK |
USD 100,000 |
0.0001 |
| USDHKD |
USD 100,000 |
0.0001 |
| SGDJPY |
SGD 100,000 |
0.01 |
Learn more:
