Forex pairs are quoted to 5 decimal places. The fluctuation of the 4th decimal point (0.84600) is known as a pip (“percentage in points” or “price interest point”). It is the movement of these pips that will determine your profit or loss. If you sell one contract EUR/USD at a price of 0.84600. After some time the market moves in your direction and is trading at 0.84100. You take your profits and close the position. The profit will be: 0.84600 – 0.84100 = 40 pips (1 lot = USD10 per pip); therefore, your total profit is 40 x 10 = USD400. – Wikipedia

Forex Trading Examples

The key principle of Forex trading is simple. You buy one currency with another currency at the present exchange rate, so you are in effect going long of the first currency and short of the second currency.

In other words, your standing increase in value as now you can sell the primary money back to get a better sum in the event the comparative power of the primary money from the next money increases. For example, in the event you’d purchased GBP 10,000 in August 2013 it’d have cost you around USD /USD exchange rate. 15,500 at the prevalent GBP The british pound had grown in value from the dollar, which means you can finally have closed your place out You started you and with $15,500 now have a gain of $1500. these are the forex trading examples.