Forex Basic 2 Spread & Pips

1. Contact size
2. Current price

You can see spread as commission for the broker, as what they all like to claim that there is no commission for forex trading which is not true. The true statement should be there are no additional commission other then the spread.

In this case the spread is 2 pips, so if you buy and sell almost immediately you will lost 2 pip.
How much is 2 pips?
It depend on your contact size

standard contact = $100,000 = 1pip = $10
mini contact = $10,000 = 1pip = $1
micro contact = $1000 = 1pip = $0.10

Currently i only know fxcm micro which allow you to trade micro contact, for most brokerage the min is mini contact

I guess that also self explain what is pips.

Forex Basic 1 PAIRS

There are tons and tons of information on "What is Forex?" and term used for forex trading.

I will try to explain everything in layman's term but if you love reading up more there a good website investopedia , they have lots of information on investing not only forex. It worth to take a look.

Back to Forex.....

Forex is also known as currency trading, when it come to currency trading we always do it in pairs.
ie. EUR/USD, GBP/USD, USD/JPY

Some of the common pairs most people trade are EUR/USD, GBP/USD, USD/JPY, AUD/JPY, AUD/USD

This few pairs are more popluar due to pairs with the least spread, better rollover and more movement.

EUR = EURO DOLLAR
USD = AMERICA DOLLAR
AUD = AUSTRILA DOLLAR
JPY = YEN/ JAPAN DOLLAR
GBP = POUND / UK DOLLAR

I will explain using EUR/USD.

MAIN CURRENCY / TRADING CURRENCY
1 EURO = 1.4115 USD
What it means?

You are comparing this 2 currency the euro and the dollar.

When you buy this pair you are buying euro using usd, so when the euro get stronger say the exchange rate hit 1 EURO= 1.5 USD you will earn 0.0885 per euro dollar you buy.

If you will to sell this pair mean you buying USD using euro.

layman's term -
you think 1 EUR can change more USD = buy
you think 1 EUR can change less USD = sell

Next i will talk about spread and pips

Short Eur/Usd

Shorted Euro on 30/4 at about 12am



Went to look at my chart at around 12 plus, saw some huge movement in the Euro... Put in some channel found out that it break the channel.

Zoom out, saw another high point, draw another channel.



Shorted at the red candle.
Almost hit my stop loss at 30 pips, but it went about 90 pips down...

Winning trade but................


I was corrected by my "teacher" that i actually "jump the gun" as there was no clear confirmation.... which is actually quite true. it was basically a gut feel thinking it might be a wash and rinse... i should have look for 1234 and other confirmation before going into the trade.

Sold Singtel for a small profit

Last Wednesday i brought a few lots of Singtel at 2.48....

Sold it for 2.52 today... Reason being the market seem to heat up and cool off rather quickly this few days... 2 days ago when the news 1st mention about the swine flu it went diving... but yesterday they announce that this swine flu is spreading fast, but it seem that it does not bother the traders anymore... I am playing safe, who know will this be like the next SARS


And also it end of my contra period so let it go for a very small profit...

IG Market platform

Next up is Puredeal from Igmarket, personally i am using igmarket platform as i like it the best.
Therefore if after reading my review, you wish to open a igmarket account let me know so i can refer you as a friend. We can split any reward given for referring.



All the broker i review are MAS regulated in short your money is save with them, even if the brokerage close down.

You are also able to trade CFD with IG market but their data feed is delayed, if u want live data feed you will need to pay a small fee or complete a number of trade depending on the live data you want. Their commission is $25 per trade and the roll over is 2.5% + SIBOR




The thing i like about IG is the margin, if u place a stop loss level before u enter a trade it will only use that amount of pips as the margin, therefore allowing you to have more balance to enter more trade. Another thing is their stop loss, all you need is to enter the amount of pips u want instead of counting the number yourself.





And also they have guaranteed stop loss (need to pay 3 additional pip for this)
Editing your stop n limit level is also a breeze....




I did hear some of them complaining of lag, browser being unstable, order did not go thru....
But i have not face any of thes problem myself therefore i am unable to comment on that...

Forex trading platform

There seem to be hundreds of trading platform out there, and when i first got to know FX trading the first question in my mind is which platform to use.... lucky i got some "teacher" from terraseeds where i attend my FX course told me what to look for.... I will review on some of them,
like IG, CMC, GFT and CITY INDEX let just start with these four of them.

Please note that you can sign up for a demo account from any of the broker

I will start with GFT platform first.



They have 3 platform application base, web base and mobile base, i have only tried their web base thereform i can only review on that....









GFT have the cleanest outlook of all the no nonsense forex only interface (GFT currently only have forex trading) let user easily add and remove pairs from their watchlist. They have most of the needed window like price, pending orders, open orders, charts and alerts nicely fitted into ur main window.

To edit orders is also a breeze click on the open order and set ur limit, stop or oco from there, but it seem like you would need to open a postion before u can edit ur stop which can be dangerous during heavy trading hours.

As for the spread, they have quite similar spread as other brokerage... 1 for Euro... 2 for Yen... 2 for Sterling... 2 for Swiss but note they do not have a fix spread... i was also told althought they do not have fix spread but their spread have been quite constant over the years

Another point to take note is that they do not have mini contact, and they stop at 2 decimal place it mean that ur profit will only be in round figure like $1 or $2.

But GFT got Kathy Lien as their spoke person this a real big plus... her class and insight of the market is really very enriching...

Market outlook this week

STI index close lower by 32.240 today closing at 1818.610 due to the swine flu...
Kind of glad i cut loss on my SGX last friday...SGX close at 5.880 today....

More new on the swine flu.....


"Swine flu spreads economic shivers"
PARIS : The global outbreak of swine flu sent shivers through financial markets on Monday... more

"Stock markets dive on swine flu fears"
LONDON - Global stock markets mostly tumbled on Monday as investors took fright at a swine flu outbreak .... more
SOURCE: Channel News Asia
Dun look good for the market this week....