pIn a title=forex trading href=http://www.trading.com.au/forex/ target=_blankforex trading/a the pip is the basic unit. The acronym for pip is percentage in point. A pip is 1/100 of a basic unit of currency for a nation. For example 1/100 is a cent for dollar-based currency or the digit in the fourth spot following the decimal. For an exchange rate of 2.0041 the 1 equals one pip. A forex trader with active trades is either going to be long or short in the market. If hes long or entered a long order, his trade needs the exchange rate in increase in order to make a profit./p
pThe opposite term or long is short. This means the exchange rate needs to decrease in order for the trade to be profitable. This may seem complicated but it is better than using terms like buy and sell. If a forex trader has shorted a currency pair, selling it in anticipation of a price decline, he will then buy the pair when the position is closed./p
pBi-directional trading gives two meanings in a title=forex trading href=http://www.trading.com.au/forex/ target=_blankforex trading/a. You can purchase a currency in anticipation of profiting when the exchange rate rises, and to purchase currency to cover a short sell. The bid is the asking price retail traders pay when they to go long on a currency pair. The ask (selling price) is always higher than the bid (buying price). The difference between the two prices is the spread. The spread is the houses commission on the trade./p
pIts good to remeber one simple fact – brokerage or online traders only make money from active trades. Companies have been known to move large amounts at their disposal to move the price on a currency pair a few pips higher or lower, to manipulate delayed-entry orders placed at a certain level. Once the trades are active, the house has earned its profit. The trades are closed, sending the currency pair back to its original position. This is known asstrong forex market manipulation/strong./p