Forex Terminology

Forex Terminology

Every trader in the Foreign Exchange ‘FOREX’ hopes to make a profit from something called ‘PIP’.
It may sound silly, but gains in pips can potentially make you over wealthy . Take your time with this information, as it is required knowledge for all Forex traders.
Don’t even think about trading until you are comfortable with pip values and calculating profit and loss.

What is a pip ?
Pips stands for ‘PERCENTAGE IN PIONTS’. In the Forex trading, a ‘PIP’ is a unit of measurement which represents the smallest change in the price of currency or a currency pair. In the stock markets this is a classified as a ‘POINT’.
As a result, some folks refer to pips as points.
Pips are the last decimal point in an exchange rate or currency pair.
For the majority of currencies a ‘PIP’ is equal to 0.0001.
This means that if you purchased USD/CHF at 1.2310 and sold at 1.2330, you made 20 pips

USD/JPY: 110.78 .01 divided by exchange rate = pip value
USD/CHF: 1.1227 .0001 divided by exchange rate = pip value
GBP/USD: 1.9799 .0001 divided by exchange rate = pip value

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Simple Moving Average

Simple Moving Average

the simple moving average is formed by calculating the average price of a security over a particular number of periods.

While it is possible to create moving averages from the Open, the High and the Low data points, most moving averages are created using the closing price.

For example: a 4-day simple moving average is calculated by adding the closing prices for the last 4 days and dividing the total by 4.

11+ 12 + 13 + 14 = 50

(50 / 4) = 12.5

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Relative Strength Index

Relative Strength Index


Relative Strength Index (RSI)
Relative Strength Index, or RSI mean A technical indicator used to compare the magnitude of recent gains to recent losses to determine overbought and oversold conditions in the market. . It can be calculated using the this formula:
Rsi=100 100- 1+rs
readings below 20 refer to oversold, while readings over 80 indicate overbought. the RSI ranges from 0 to 100 .

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What is a Candlestick?

What is a Candlestick?

While we briefly covered candlestick charts in the previous lesson, we’ll now dig in a little and discuss them more in detail. First let’s do a quick review .
Back in the day when Godzilla was still a cute little lizard, the Japanese created their own old school version of technical analysis to trade rice.

A westerner by the name of Steve Nison “discovered” this secret technique on how to read charts from a fellow Japanese broker and Japanese candlesticks lived happily ever after .

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