Because you are always comparing one currency to another, currency is quoted in pairs. This may seem confusing at first, but it is actually pretty straightforward. Below is an example of a EUR/USD quote. It shows you how much one euro (EUR) is worth in US dollars (USD).
If you, instead, wanted to look at the euro in terms of the Japanese yen (JPY), you would look at the EUR/JPY rate. If you wanted to see the value of a US dollar in Canadian dollars (CAD), you would look at the USD/CAD.
The first currency in a currency pair is the "base currency"; the second currency is the "counter currency". When you buy or sell a currency pair, you are performing that action on the base currency. So, if you are bearish of euros, you could sell EUR/USD. Now, when selling EUR/USD, you are not only selling euros, but are buying US dollars. If you are more bullish on the Japanese yen than you are on the US dollar, you could sell the EUR/JPY instead. It's all up to you.
Let's say that you sell EUR/USD at 1.4022. If the EUR/USD falls, that means the euro is getting weaker and the US dollar is getting stronger. Say the EUR/USD falls to 1.3522. In that case, you would have a profit. If it rose to 1.4522, you would have a loss. So just remember: if you sell a pair, down is good; if you buy the pair, up is good.
BUY EUR/USD at 1.4022
Down = Loss Up = Profit
SELL EUR/USD at 1.4022
Down = Profit Up = Loss
But I don't have any euros. How can I sell them?
You can buy or sell anything you see active on your trading station, even if you don't have any of that currency. When trading currency, you are speculating on the change in rates. You do this by borrowing the euros. This is standard for most currency traders. This also allows you access to leverage, which can increase your profits and your losses.
So, let's look at the example again. When you sell EUR/USD, you borrow 1,000 euros and sell them to someone else in the market, earning the equivalent in US dollars. Say you did this while the EUR/USD is at 1.4022. In that case, you borrowed 1,000 euros, sold them for $1,402.20, and held on to those US dollars.
Two weeks later, you sold those US dollars when the rate was 1.3522. Since the EUR/USD price has fallen, you get more euros back at the end than you borrowed. So, you return the 1,000 euros you borrowed, and the remaining €36.98 is your profit to keep. If the price had risen to 1.4522 instead, that €36.98 would instead be a loss. Your trading station will do the math for you and apply the profit or loss directly to your account.
Buy currencies that are going up. Sell currencies that are going down.
Find the best pair to do that with.
A pip is the unit you count profit or loss in. Most currency pairs, except Japanese yen pairs, are quoted to four decimal places. This fourth spot after the decimal point (at one 100th of a cent) is typically what one watches to count "pips". Every point that place in the quote moves is 1 pip of movement. For example, if the EUR/USD rises from 1.4022 to 1.4027, the EUR/USD has risen 5 pips.
"Stock indices have 'points', futures have 'ticks', currency has 'pips'."
The monetary value of a pip can vary according to the size of your trade and the currency you are trading. BLUESUISSE demo accounts typically trade in increments or "lots" of 10,000. A pip in a standard demo account in EUR/USD is worth $1.00 per lot. If you were trading 3 lots, you would have 3 pips of profit or loss per pip the EUR/USD moves, and, therefore, $3.00 of profit or loss.
FOR EXAMPLE: The EUR/JPY pips are valued in Japanese yen. USD/CAD pips are in Canadian dollars, and so on. Once again, your trading station makes it all easier by doing the math for you.