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What is forex?
Forex means foreign exchange: exchanging one currency for another. A currency pair expresses the value of the first currency in units of the second. In EUR/USD, EUR is the base currency and USD is the quote currency.
EUR / USD 1.0800
In this hypothetical quote, one euro is worth 1.08 US dollars. At 1.0900, a euro buys more dollars; at 1.0700, it buys fewer.
Buying EUR/USD expresses a position in favour of the euro relative to the dollar. Selling expresses the opposite. Quote conventions can differ between spot and futures products, so always identify the actual instrument.
What is a pip?
A pip is a standard unit used to describe changes in a currency quote. For many pairs, one pip is 0.0001; for common yen pairs such as USD/JPY, it is 0.01. Some platforms display an additional decimal place, representing a fraction of a pip.
| Pair | From → to | Move |
|---|---|---|
| EUR/USD | 1.0800 → 1.0830 | +30 pips |
| USD/JPY | 150.20 → 150.45 | +25 pips |
The spread is the difference between the bid and ask. An illustrative EUR/USD bid of 1.0800 and ask of 1.0802 gives a 2-pip spread. A pip count alone does not tell you your cash profit or loss: the position size and currency conversion also matter.
How to read a candlestick
A candle summarises four prices for one chosen interval: the open, high, low and close. Its body runs between the opening and closing prices. The wicks extend to the high and low. Colours depend on the chart settings, so read the legend instead of assuming green always means an increase.
A hypothetical candle. The close is above the open; the full range extends beyond the body.
A one-hour candle and a daily candle describe different intervals. Neither shows every price change inside that interval. Reading a candle is a description of what happened, not a guarantee about the next move.
Leverage changes the size of the risk
Leverage lets a deposit support a larger market exposure. It magnifies losses as well as gains. Margin is the deposit requirement; it is not necessarily the most you can lose.
If $1,000 supports $20,000 of exposure, a 1% adverse change in that exposure is approximately a $200 loss, before costs and conversion effects. That is 20% of the $1,000 deposit.
The regulator warns that retail over-the-counter forex can involve losses beyond the initial deposit. Rules, protections and available products vary by country. Understand the local rules, verify the provider, and read the product’s risk disclosures before considering an account. Promises of guaranteed returns are a warning sign.
Check your understanding
Use a notebook rather than an order ticket for these exercises. All numbers are invented for learning.
EUR/USD moves from 1.1000 to 1.1025. How many pips?
25 pips: (1.1025 − 1.1000) ÷ 0.0001 = 25. This says how far the quote moved, not how much money a position earned.
Can a rising candle still have a lower wick?
Yes. The low can fall below the opening price even when the closing price finishes above the open.
Does a smaller margin requirement make a position safer?
No. Compare the market exposure and possible losses with the account funds; the required deposit alone does not measure risk.
For each example, write down what you know, what you calculated, and what information is missing. This habit separates observation from assumptions.
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About this guide
Forex Vision publishes this introductory guide while preparing its education launch. It is general educational material, not personalised financial advice or a recommendation to trade. No course enrollment or trading results are promised.
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