There are sometimes that you can only see one price but often currency exchange price are display in pairs with 'bid price and ask price'.For example EUR/USD 1.2385/1.2390, 1.2385 is known as the bidding price, while 1.2390 is the asking price. Bidding price is the price that you sell the base currency (EUR in our case here); asking price is the price that you buy the base currency. The different of the bidding and the asking price is called 'spread'.You might notice that bidding price is always lower than the asking price. Ever wonder why? The different of the bid-ask price (socall 'spread') is how currency brokers make profits without charging commissions to their clients (sell high and buy low in the same time.)

A pip is the smallest value in a Forex quote. Take our example earlier on EUR/USD. If the exchange rate goes from 1.2385 to 1.2386; that's one pip. In mathematical definition, a pip means the last decimal place of a quotation.Note that as each currency has its own value, the value of a pip is different from one another. Say USD/JPY rate at 120.75, a pip would be 0.01 (the second decimal place); while for EUR/USD 1.2385, a pip would be 0.0001 (the fourth decimal place).

Trading Forex in MACD: Moving Average Convergence/Divergence
MACD uses exponential moving averages (EMA), which are lagging indicators, to include some trend-following characteristics. These lagging indicators are turned into a momentum oscillator by subtracting the longer period of EMA from the shorter period of EMA. Translating the words into mathemathcis, this is how a MACD calculation looks like:MACD = EMA [shorter period] - EMA[longer period]The resulting plot forms a line that oscillates above and below zero (positive when EMA[shorter] > EMA[longer] and negative whenver EMA[shorter] < EMA[longer]), without any upper or lower limits. MACD is a centered oscillator and the guidelines for using centered oscillators apply. Besides the resulting plot, a standard signal line (or some call it trigger line) is added in the MACD graph for the indication. In maths form, this is how we get the signal line:Signal = EMA [certain period] of MACDGenerally, a 12 day EMA is often userd as the EMA[shorter period]; 26 day EMA for the EMA[longer period]; and 9 day EMA of MACD is used as the signal line. These are the standard figures used by the creator of MACD, Gerald Appel, when the technical indicator first used in 1979. Another popular calculation periods in modern days is 7, 13, 5; where EMA[7] is used for the short period, EMA[13] is used for the long period, and 5 days for EMA of MACD (the signal line).Again, translating words to maths presentation, this is how a standard MACD calculations looks like:MACD = EMA [12] - EMA[26]Signal = EMA [9] of MACD

ere's how traders take MACD as trading indicators. From the maths of MACD,MACD = EMA [12] - EMA[26]Signal = EMA [9] of MACDA bullish signal (buy in signal) is triggered wheneverA positive MACD (12-day EMA is trading above the 26-day EMA, EMA[12] > EMA[26])Moving average positive crossover (MACD is trading above the EMA[9] of MACD)Center line positive crossover (MACD=0 and MACD is trading above the EMA[9] of MACD)A bearish signal (sell off signal) is triggered wheneverA negative MACD (12-day EMA is trading below the 26-day EMA, EMA[12] < EMA[26])Moving average negative crossover (MACD is trading below the EMA[9] of MACD)Center line negative crossover (MACD=0 and MACD is trading below the EMA[9] of MACD)MACD is more than just about market momentum, it also gives the signal in the trend indication.If MACD is positive and rising, then the gap between the 12-day EMA and the 26-day EMA will be widening. This indicates that the rate-of-change of the faster moving average is higher than the rate-of-change for the slower moving average. Positive momentum is increasing and this would be considered bullish. If MACD is negative and declining further, then the negative gap between the faster moving average and the slower moving average will be expanding. Downward momentum is accelerating and this would be considered bearish.Often in reality, the Forex exchange price may drop to new selloff low but the MACD does not hit the new low, this maybe the sign of end of bearish. Or vise versa, the Forex exchange price may hit new high but the MACD might not be hitting on the new high point, this often indicates the change of trend from bullish to bearish

The major usage (or benefit) of trading with MACD divergence is that the MACD chart has the ability to overshadow on trend change, which in turn trigger the sell off or buy in signal. Simply said, negative divergence indicates a change of bullish trend to bearish, while a positive divergence indicates a change of bearish trend to bullish. As MACD trading is taking a relative simple approach on the market, MACD is often used along with other technical analysis (stochastic oscillator for example).

The Relative Strength Index (RSI) is one of the popular Technical Indicators in oscillator charting methods. RSI is normally used to compare the currency strength and to predict currency price movements.Mathematics calculations behind RSI charting: RSI= 100 - 100/(1+RS) where RS = sum of positive closing prices divide by sum of negative closing prices. RSI helps traders to predict price movements and to identify market turning points. Rising in RSI will normally followed by a rise in currency price; vise versa, downtrend RSI indicates that the currency price is more likely dropping

Forex market is a non-centralized market. There is no common market place for Forex traders and there is no so-call ‘standard’ in foreign currency exchange price. Different Forex dealers offer very different deals to their customers.As an individual FX trader, you depends solely on the dealer to make a transaction in your trades, thus picking up the right dealer is extremely crucial in your risk.You may wonder how does a faulty dealer can cheat on your money as all investment call have to go thru your decisions.Well, here's a typical example:Often a bad dealer is not totally scams.They are smart persons that trick money from traders that are not well-aware. These dealers, often known as retail market makers, will often encourage their clients to trade on margin and set stop loss orders, which allow the market makers to close out trades almost at will during busy markets at prices they have set. If the market maker does not offset the trader's position, the loss generated when a stop loss is triggered becomes the market maker's gain.Trade prices are easily skewed one way or the other depending on the retail trader's position, which is known by the market maker.Traders can be encouraged to take risky positions just before major economic announcements. If all else fails, the market maker can quote extreme prices (known as spiking) to trigger stop loss orders while the client is at work or asleep.The vast majority of retail FX traders are not profitable. For those losing retail speculators, much of the funds they had on deposit will be, in some form or another, transferred to the market maker