How to trade forex?

Currencies are traded in pairs.

The first currency in a pair is referred to as the base currency and the second currency in the pair is the price currency.


Base currency / Price Currency

The type of transaction (buy/sell) always relates to the base currency.
From a technical perspective, this always involve two opposing transactions.
For example
Buying EURUSD at a price of 1.12591 means that you are buying 1 Euro with 1.12591 US Dollar Selling EURUSD at 1.23452 means that you are selling € 1 and buying $1.23452.

In forex trading, traders always buy one currency against the other currency.

A pip and a fractional pip

Pip (percentage in point) is the smallest unit in foreign exchange trading in which the price change of a currency pair is indicated.


A fractional pip trading

As a rule, a pip is the smallest possible price change of the 4th digit of the presented price.

For example
a price change from 1.12010 to 1.12020
a price change from 114.010 to 114.020.

At PSS, traders can trade a factional pip which is as small as 1/10 of a pip.

The size of the position

The term “lot” is often also used in this respect. A lot is the standard volume of a contract in foreign exchange trading.

1 lot = 100,000

units of the base currency

For example
Trading 1 lot of EURUSD corresponds to a position size of 100,000 Euro. 0.01 lot is the smallest position to be traded in amount of 1,000 Euro

At PSS, you can trade any currency pairs as little as 0.01 lot and as many as 50 lots.

Calculating trading profit

Trading example based on a trading position of €10,000 (0.1 lot) in the EURUSD currency pair.

A trader sold EURUSD at a price of 1.12509 (open a position) and bought back EURUSD at a price of 1.12159 (close the position).

Sell €10,000 (0.1 Lot) EURUSD at 1.12509 10,000.00 11,250.90
Buy €10,000 (0.1 lot) EURUSD at 1.12159 10,000.00 11,215.90
Difference 0 + 35.00

This trade would have resulted in a profit of $35. The profit always arises in the price currency, i.e. in our example in USD, and is then immediately converted to the account currency.