More Wealth Guide

Understand what is forex pips and spread and how it works. These are very important measure of success in forex trading.

Understanding Pips and Lot Size

Pips is the basic measurement use in forex trading to measure price movement. Pip is the smallest price movement in forex trading and pip stands for the acronym percentage in point. Pip is always measure by the last digit in forex price quotes, say you bought EUR/USD at 1.3123 and was able to sell it at 1.3126, you then earn 3 pips which is the difference between the sell price and the buy price. Every pip has a dollar equivalent depending on the lot size a trader is trading. Micro lot 1 pip is equal to $0.10, a mini lot 1 pip is equal to $1.00 and a standard lot 1 pip is equal to $10.00.

Forex Quotes

Let us use the following forex quote for EUR/USD to understand further what is forex spread. Sell price 1.3120 and Buy price 1.3123, this quote means that you can buy EUR/USD at 1.3123 and you can sell it or short sell it at 1.3120. Did you notice the difference between the buy price and the sell price? This is called forex spread.

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To help you better spot the 1-2-3 chart trading opportunity, you will need to be familiar with identifying uptrend and downtrend in the price chart. Keep in mind that an uptrend is a series of higher high and higher low on prices while a downtrend is a series of lower high and lower low on prices, master this and it will become handy on your trading.

1-2-3 pattern is one of the popular reversal trading patterns in forex trading. Therefore you will need to have an established trend, whether uptrend or downtrend to have a valid 1-2-3 pattern. That is the reason you need to be an expert in identifying an uptrend and downtrend.

It will normally start when a trend slowly turns to a trend less movement or sideway move, this happen when it stop registering higher high in an uptrend or stop registering a lower low in a downtrend. First step is draw a horizontal line connecting the recent high before the failed higher high and connecting the recent lows. Once the sideway trading range is set and established using the two horizontal line you should start marking the 1-2-3 points in the chart.

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