So how do we make money in the Forex? It’s very simple. All currencies are traded in pairs and there are only seven major currency-pairs for the beginner to be concerned about. Over 90% of the trading in the Forex takes place in these seven pairs and they are: 1) The Australian Dollar versus the U.S. Dollar (AUDUSD); 2) The Euro versus the U.S. Dollar (EURUSD); 3) The British Pound versus the U.S. Dollar (GBPUSD); 4) The New Zealand Dollar versus the U.S. Dollar (NZDUSD); 5) The U.S. Dollar versus the Swiss Franc (USDCHF); 6) The U.S. Dollar versus the Canadian Dollar (USDCAD); and 7) The U.S. Dollar versus the Japanese Yen (USDJPY).

That’s pretty simple when you consider that in other markets there can be thousands of equities to scan and consider and research. And you don’t even need to trade all 7. Many traders specialize in just one. Get to know it like the back of their hands. It’s not a bad plan. As I mentioned before, the Forex is the easiest market to learn and the easiest to learn to trade of any I’ve ever encountered. Don’t fall for the propaganda about how “difficult” and “dangerous” it is. Poppycock! Flapdoodle! It’s a lead-pipe cinch. Any child can learn to do it and it would be much more profitable for them if they did, rather than spending all their time playing computer games that pay nothing.

Now you notice, the U.S. Dollar is featured in all these pairs. However, in the first four, the U.S. Dollar is mentioned last while in the last three, the U.S. Dollar is mentioned first. There’s a reason for that. In the Forex, the currency mentioned first is called the “Base currency” and the currency mentioned last is called the “Counter-currency.” Now get this rule: THE CHART ALWAYS MEASURES THE PERFORMANCE OF THE BASE CURRENCY. When the chart is going up, it means the base currency is appreciating in value against the counter-currency and when the chart is going down, it means the base currency is losing value against the counter-currency. Remember that rule.

Movements in currencies are measured in Price Interest Points, abbreviated “Pips.” The smallest move a currency can make is one pip up or down. And these currencies move very well. Some of them average over 100 pips a day in movement. Plenty of room to take a nice profit every day if you can catch the move.

Let’s take the Euro versus the U.S. Dollar as an example. At the moment of drafting this article, the Euro is trading at 1.4160 versus the U.S. Dollar. That means it takes $1.4160 dollars to purchase one Euro at this moment. One hour from now, even as little as ten minutes from now, the Euro may be trading at $1.4180 versus the USD. That’s a move of 20 pips. But if the Euro goes down to 1.4140, that’s a negative move of 20 pips. On one standard contract, which we call a “Lot” in Forex trading, the Pip is worth $10. So a move of 20 pips is worth $200 per contract or “Lot.”

Now let’s look at a very typical move on the daily chart of the Euro versus the U.S. Dollar. On August 17 of this year, the Euro began to increase or appreciate in value against the U.S. Dollar and reached the height of its movement on October 1. Here’s a Daily Chart of the EURUSD with this move showing:

Between 700 and 1,400% on your money, depending on the leverage, in 45 days! And that’s a very typical move in the Forex. Not unusual at all.

That’s phenomenal! That’s the Forex! In terms of profit potential on small investment, it puts every other market in the world into the shade. Nothing else even comes close!