Today was busy on other fronts, and I only got one chapter in from 17 Proven Strategies to Trade Forex. A quick summary of things learned:
In each currency pair, like USD/EUR, the 1st current is the "base currency" (USD) and the 2nd is the "counter currency". The exchange rate is read in relation to the 1st. USD/EUR = .6 is read "1 USD is worth .6 Euros."
A pip has to do with the number of decimal places the currencies go out. Usually it's 4, like 1.3232, and one pip is .0001. To get the value of a pip, you put it over the exchange rate (.0001/1.3232).
The top currency pairs were listed as of 2010 stats. The regulatory organizations were listed though I only remember BIS, forgetting what it stands for at the moment.
Leverage and margin were discussed as well in regards to lots. I didn't know a standard lot was $100,000. Mini, micro, and nano lots divide the standard size by 10, 100, and 1000. Margin is the amount you have to put up to buy a lot.
How does this help me make money? MetaTrader displays Balance, Equity, Free Margin, Margin Level (%), and Margin. I'm still trying to fully understand where these numbers are coming from. I'll be looking at my order size and see how it relates to a lot tomorrow. Chapter 2 is next and it's even titled, "How you Make Money," so yeah, I'm enjoying the book as it supplements my paper trading.
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