How Forex Trading Works..

How Forex Trading Works..
Currency trading is mainly about buy and sell activities. Currencies are traded on a price interest point (normally called pip) system. Every currency pair has their own pip value. The objective of a trader is to hold as many profitable pips as possible. Some pip values are fixed, but some can fluctuate depends on the currency gain or loses strength. Normally I trade by using margin trading, where small deposit is required to control much larger amount in the market. Here I will use 1 percent margin deposit so that $1000 control $100,000 of trade currency. $100,000 is the notional amount. Let me shows some major currency pair with the currency exchange rate and the pip values.
Currency
Currency exchange rate
Pip Value
(GBP/USD)
1.7204
$10.00 per pip (fixed)
(EUR/USD)
1.1789
$10.00 per pip (fixed)
(USD/CAD)
1.1642
$8.59 per pip (fluctuating)
(USD/JPY)
117.82
$8.49 per pip (fluctuating)
For GBP/USD, 1 pip movement can be from 1.7203 to 1.7204. That means from 1.7102 to 1.7202, it should be 100 pip movement. Lets look for another example, USD/JPY, 1 pip movement is from 117.82 to 117.83 and 100 pips movement is from 117.83 to 118.83.