Basic of Forex market

Posted by: | Posted on 5:10:00 PM | Post Categories
Basic of Forex market

Currency pair: 
By the system of share market a share of a country should be evaluate against the currency of that country.
However, in Forex market it is impossible to evaluate of a countries currency. Like against 1 USD we got 0.91 EURO (EUR) or 1.34 Australian Dollar (AUD). Again, if we talk about Japanese YEN (JPY) you can get 114 Yen against dollar.



Which is the real value of dollar?
People of different countries trade in Forex market then in which rate they buy Dollar $ that is why in Forex market every trade complete by currency pair.
Such as,
              EUR/USD is a currency pair.
Recently 1EUR/USD = 1.1060, means we will get 1.1060 against of one EURO.
Let us see some other currency pair:-
AUD/USD = 0.7244, means 1.7244 USD against 1 Australian Dollar (AUD).
GBP/USD = 1.4222, means 1.4222 USD against 1 Great Brittan Pound (GBP).
NZD/USD = 0.6809, means 0.6809 USD against 1 New Zealand Dollar (NZD).
USD/JPY = 113.77 means 113.77 JPY against 1 USA Dollar (USD).
GBP/JPY = 161.44 means 161.44 JPY against 1 Great Brittan Pound (GBP).
EUR/GBP = 0.7730 means 0.7730 GBP against 1 (EURO).

Now there is one question that why we are taking four decimal (*.****)?  We are familiar to two decimal (*.**).
⇒ Actually, Maximum movement in Forex market is in 3rd and 4th decimal. So it slandered for calculation of market movement.
Let us see some movement of EUR/USD for few days:

DateOpenHighLowCloseDifference in Open & CloseDifference in High & Low
29/2/20161.09131.09621.08591.087241 Pips 103 Pips
1/3/20161.08721.08931.08331.085616 Pips 60 Pips
2/3/20161.08651.08801.08251.08672 Pips 55 Pips
3/3/20161.08681.09721.08531.095587 Pips 119 Pips
4/3/20161.09561.10431.09021.100044 Pips 141 Pips
7/3/20161.09871.10261.09391.101124 Pips 87 Pips


Some Forex Brokers support 5 decimal. 5th is called Pipette. (*.*****)
Such as

DateOpenHighLowClose
29/2/20161.091321.096201.085931.08726
Pipettes2036

 

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