Monday, July 2, 2012

What I learned from Mr. Mario Singh- Part 2


Pip= what puts money in your pocket . It's the change in value between currencies.

1 Pip= USD $ 10 ( for Standard Lot)

Lot =  size of your trade which depends on your initial capital.

Ex. USD/JPY = 81.50 1 USD= 81.50 JPY

If price rises to 81.51 or greater , BUY (LONG)

If price lowers to 81.49 or lesser, SELL (SHORT)

Fraction Theory:

EUR = 1.350
USD

If EUR increase , BUY(LONG)
If USD increase, SELL (SHORT)

FOREX RULES:


The basis of the above rules should be the general trend of the Graph of the underlying currency pairs. If  the general trend  is Up , we can Buy or Long the currency pair but if its going Down , we need to Sell or Short the currency pair.  The Stop Loss is assigned in order to prevent further losses if you happen to made the wrong choice . The Profit Target is assigned usually twice the Stop Loss to make a profit to loss ratio of  2:1.