Exchange rates, currency pairs, pips, spreads, lots, leverage, margin, pip value conversion and overnight swaps: every core concept of forex trading.
For: beginners curious about forex trading
Risk warning: forex, CFDs, options, futures and crypto assets usually involve leverage or high volatility, and you can lose more than you put in. This lesson only teaches the concepts; all numbers are for illustration and are not investment advice.
More advanced courses that build on this one.
Changing money before a trip abroad is a forex trade. When the exchange rate moves, the same money buys a different amount of foreign currency.
EUR/USD, USD/JPY… what does each side of the slash mean? And when the number moves, which currency got stronger?
Forex price moves are measured in pips. Zoom into each digit of a quote and see just how small 1 pip is.
Why are you down the moment you open a trade? Watch Buy fill at the Ask and Sell fill at the Bid in real time, and see the spread widen at different times of day.
Forex is traded in lots. Your lot size decides how much money each pip you win or lose is worth.
Use a "lever" to move a big position: at full leverage, a 1% price move can swing your margin by 100%.
Drag the leverage and lot size to watch used margin, free margin, the margin call warning and the line that triggers a stop-out.
How many dollars is a pip on USD/JPY worth? Where does the EUR/JPY rate come from? Learn to convert any pair's pip value into dollars.
A forex position held overnight earns or pays interest. It's set by the interest rate gap between the two currencies, the platform adds a markup, and Wednesday night counts three days.