What does forex trading mean?
Exchange rates
The 1 × 1
Standardized designations
EUR
GBP
USD
JPY
CHF
AUD
NZD
CAD
HKD
TRY
KRW
MXN
CNH
SEK
PIP - The FX Reference Size
24/5
Left, Right, Center
BID | ASK |
Always the lower quotation | Always the higher quotation |
Price to Sell a position | Price to Buy a position |
Spread/ Distance between BID & ASK price | |
Open a Short position | Open a Long position |
Investor expect falling prices, Expects profit by closing the position at a lower price than the price at which the (short) position was opened. | Investor expect rising prices, Expects profit by closing the position at a higher price than the price at which the (long) position was opened. |
Close a Long position | Close a Short position |
Lot
The standard trading unit in currency trading is called a lot. One lot is equal to 100,000 units of the base currency, for example, if someone talks about buying 1 lot of EURUSD, then 100,000€ should be exchanged for USD (Euro sold --> US Dollar bought).
Interpretation of exchange rates
The PIP-Family
From the example of the calculation model, the +/- values and the result from this, it can be deduced that the representation is a long position. If the same calculation were used for a short position, the signs would have to be exchanged. You can use the simulator provided here to get to the bottom of how it works using your own parameters.
The difference decides ...
What is important for traders & investors
Lot, Pip, Spread & Co. .... what especially newcomers should know
If you are interested in currency trading, the relationships between order size, pip (or tick) value, pip (or tick) size and difference between bid and ask price are important. If you know all the parameters, you can, for example, determine exactly how high the fees are that you have to calculate mentally for the respective transaction or what price performance is required to compensate for the spread between buying and selling.
A prime example:
The euro briefly traded at 0.96x against the U.S. dollar, but has since recovered sustainably from those lows. You think that the euro could continue to appreciate and consider buying 1 lot at a price of 1.07x. If this transaction is executed, you will have exchanged 100,000€ (equivalent of 1 Lot) into USD. The difference between the buying and selling price is 1 PIP, which conversely means that you have paid $10 more for this transaction than you would have received if you had sold simultaneously.
Since you usually do not pay any fees in currency trading, the transaction costs are included in the pricing of the buying and selling prices. This is nothing unusual, in fact it is common practice. What you need to take into account are multiplier effects. If you trade not 1 lot but 10, you not only acquire 10 times the trading position (=1,000,000) but also have to consider the fee × factor 10. The same applies to trading with fractions of lots, so-called fractionals, which are often available at brokers as mini (×1/10), as micro (×1/100) or as nanolot (×1/1000).
If you have not yet had enough time to study these or similar topics in detail, we recommend training in a virtual test environment, also commonly referred to as demo, paper or sandbox trading, before investing real money. If you are interested, please feel free to use the solutions offered through us.
Yes, I would like to practice without risk for the time being .
The "nicknames" of the currencies/currency pairs
- USD (U.S. Dollar) – Greenback or Buck
- GBP (British Pound) – Sterling
- EUR (Euro) – Fiber
- CHF (Swiss Franc) – Swissy
- CAD (Canadian Dollar) – Loonie
- AUD (Australischer Dollar) – Aussie
- NZD (NewZeeland Dollar)- Kiwi
- NOK (Norwegian Krona) – Noki
- SEK (Swedish Krona) – Stoki
- EUR/GBP (Euro/ British Pound) – Chunnel
- EUR/JPY (Euro/ Japanese Yen) – Euppy
- EUR/USD (Euro/ U.S. Dollar) – Fiber
- EUR/RUB (Euro / Russian Ruble) – Betty
- GBP/USD (British Pound/ U.S. Dollar) – Cable
- GBP/JPY (British Pound/ Japanese Yen) – Gopher
- USD/JPY (U.S. Dollar/ Japanese Yen) – Ninja
- USD/RUB ( U.S. Dollar/ Russian Ruble) – Barney
- EUR/BTC (Euro/Bitcoin ) – Nakamoto
| EUR/GBP | Euro vs. British Pound | Chunnel |
| EUR/JPY | Euro vs. Japanese Yen | Euppy |
Where do the names come from?
Why is the dollar called the "greenback"?
The U.S. dollar is called the greenback because of the paper bills that were issued during the American Civil War in 1861. These bills had green coloring on the back.
Second nickname of the USD - Buck
The U.S. dollar is called "buck" because Native Americans used to use deerskin (a male deer is called a "buck") to trade dollars.
Why is the Euro called "Fiber"?
The nickname of the euro currency Fiber ("fiber") is the least known explanation, but many say it comes from the fact that the paper used for euro banknotes is made of pure cotton, which makes it more durable and gives it a special feel.
Why is GBPUSD called a cable ("Cable")?
The GBPUSD currency pair is called Cable because there was a cable under the Atlantic Ocean that connected the United Kingdom to the United States and was used to synchronize the British pound with the U.S. dollar by telegraph. The cable was laid in 1858 and enabled the transmission of foreign exchange rates from London to New York trading desks.
Why is the British pound (GBP) called "sterling"?
The British pound is officially called the pound sterling and is not just a nickname. Sometimes it is also abbreviated as Pound or Sterling. The name sterling comes from the time when the British pound had the same value as a pound of sterling silver.
Why is the Canadian dollar called a "loonie"?
Loonie is a nickname for the Canadian dollar because a dollar coin has a picture of a bird named Loon, which is very popular in Canada.
Why is the New Zealand dollar called "Kiwi"?
The New Zealand dollar is nicknamed Kiwi, which is the national symbol of New Zealand, which is also the name of a bird called Kiwi. It is small, brown, furry and cannot fly, just like a kiwi fruit.
Why is EURGBP called "Chunnel"?
The EURGBP currency pair is sometimes called Chunnel, which is an abbreviation for the Channel Tunnel, which connects the channel between Great Britain and France (Europe).
Most liquid currencies gallery
Euro vs. US Dollar
British Pound vs. US Dollar
US Dollar vs. Japanese Yen
US Dollar vs. Canadian Dollar
Australian Dollar vs. US Dollar
New Zealand Dollar vs. US Dollar
US Dollar vs. Swiss Franc
Trader's Slang
Calculation of a Pip-value
Official Fixing of the European Central Bank
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