A common dilemma that many traders face, especially beginners, is which price is more important to use when drawing a trendline?

Is close the most important price, or should we use the low price for an up trendline and the high price for the down trendline?

Well, for the close price advocates, Charles Dow himself considered the close price as the most important price.

However, we need to have in mind that Charles Dow lived in the 19th century when computers didn’t exist! So those “old school” traders used to record prices on a piece of paper every day!

Nowadays, things are quite different. Thankfully! The advancements in technology, computers, etc allow viewing prices in many ways and timeframes. 

Additionally, all trading platforms provide not only the close price but also the open, high and low price.

So, if prices decline to a lower level and then bounce off and close higher what does it mean to us as traders?

Maybe the market rejected the lower level for some reason and prices moved and closed higher? Or differently put, prices found support at the lower level and bounced up?

So, in this case, we could use the low price instead.  

Similarly, if prices rise and then subsequently decline to close lower, what does it mean?

![4.1.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/4_1_72f8e41ee0.png)

Well, it simply means that high prices were rejected by the market as they found resistance, and this is enough for us to use the high price instead of the close!

That should clear things up now! 

How to Draw a Trendline using the Close or High/Low | NAGA Learn

What are Trendlines, how to draw them, what's the slope of a trendline, and more. Enter NAGA Learn and grow your trading knowledge!

Trendlines | NAGA Learn

Trendlines

A common dilemma that many traders face, especially beginners, is which price is more important to use when drawing a trendline?

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How to Draw a Trendline using the Close or High/Low

Many of you might ask at this point “What is considered a valid penetration of a trendline?”

Well, there are different ways to determine that, and we’re happy to fill you in!

For starters, 2 consecutive lower closes below the up trendline will signal a reversal to the downside.

![3.1.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/3_1_7c611045ad.png)

Similarly, during a downtrend, 2 consecutive higher closes will signal a reversal to the upside.

![3.2.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/3_2_8d46f84002.png)

Basically, the candlestick bodies of the 2 consecutive closes should be of an average-at-least size to convince that the market is determined to move the prices in the corresponding direction.

Note that too small candlestick bodies show indecision!

Another way to determine a valid breach of a trendline is the 3% rule. 

In simple words, this refers to a violation of 1-3% before calling it a valid penetration. 

The 3% rule may apply to higher timeframes where the 1% violation may be more appropriate for lower timeframes!

Wondering how to draw a trendline using the close or high/low prices? 

Good! That’s the topic of our next article!


How do we Determine a valid Penetration for a Trendline? | NAGA Learn

Many of you might ask at this point “What is considered a valid penetration of a trendline?”

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How do we Determine a valid Penetration for a Trendline?

Wondering what the slope of a trendline is? You’ve come to the right place! Let’s get started, shall we?

Remember how in our previous article, we mentioned how trendlines are used to give the trader a better sense of which direction the market is moving?

Well, we need to clarify, however, that the fact that we drew a trendline does not mean that prices will indeed reach 100% or follow it.  

In simple words, the slope of the trend may change any time no matter what and hence the trendline needs to be adjusted to reflect the new rate of ascend or descend. For instance, the trendline may become steeper or slower!

In the following example, the trendline labeled as 1 has been proven to be slow as prices accelerated and formed a new steeper trendline.

As a result, we need to adjust the trendline!

![2.1.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/2_1_dfdb280cb5.png)

The new trendline labeled with the number 2 is steeper but is it sustainable?

Let’s take a look at another example. 

![2.1-1.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/2_1_1_a989c7f3bd.png)

Here, the original trendline has eventually turned out to be too steep and instead the slower prices formed a slower trendline.

As you can see, the new trendline labeled with the number 2 is drawn to reflect the new slope of the trend.

When a steep trendline is broken, usually a correction will be in place and a new trend will follow at a less steep angle and we may add more sustainability.

Of course, now a new question arises.

What is the best slope?

Well, according to W. D. Gann, the 45o degree angle is ideal for a sustainable trend but this is another topic in its own right!

Next, we’ll be looking at how we can determine a valid penetration of a trendline!



 What’s the slope of a trendline? | NAGA Learn

Wondering what the slope of a trendline is? You’ve come to the right place! Let’s get started, shall we?

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 What’s the slope of a trendline?

Now that you guys know what a trendline is, let’s have a look at how to draw one!

It's pretty simple actually!

To draw a straight line, two points are needed. Similarly, to draw an up trendline 2 higher bottoms are required.

So, to draw an up trendline, simply draw a straight line connecting the 2 bottoms.

This is called a tentative trendline, like the one below.

![1.1.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/1_1_c079960ff7.png)

Similarly, to draw a downtrend line, we connect two tops!

![1.2.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/1_2_3bb8bc506b.png)

Now, when the trendline is verified with a third point, then it is known as a valid trendline.

![1.3.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/1_3_405af40188.png)

Which one is more reliable?

Well, valid trendlines are more reliable and traders feel more confident that prices will find support at an up trendline or resistance at a down trendline.

![1.4.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/1_4_4fa1f70874.png)

In a nutshell, the more times a trendline has been tested the more reliable it is.

Additionally, the time factor is also important. The more recent the trendline has been tested the stronger it is.

For example, a trendline that has been tested 10 times in the last month compared to 10 times in the last decade is more reliable and stronger.

In addition to that, a trendline that has been intact for the last 6 months is considered stronger compared to a trendline that has not been violated the last 3 days.

When the price reaches the trendline it will subsequently bounce off, and if the price manages to breach the trendline, then the reversal will be worthwhile. 

So, basically, theory has it that the breaking of a strong trendline implies a strong reversal. 

Now you know how to draw a trendline!



 How to Draw a Trendline | NAGA Learn

Now that you guys know what a trendline is, let’s have a look at how to draw one!

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 How to Draw a Trendline

Welcome to yet another awesome series of articles!

As you know, we have already talked about what a trend is, and how it may be identified in many ways such as the classic chart patterns, the moving average, the channel, and other cool techniques.

However, it’s now time to move on to another method, equally interesting and useful!

The trendlines!

So, let’s have a look at trendlines, what they are and how they can help us analyze the price charts.

For starters, a trendline is a visual tool to help us identify the trend either up or down.

It is a graphic representation of the prevailing trend.

Cool, right?

Well, recalling our school years, to draw a straight line at least two points are needed. Connect two points and voila, a straight line.

The more points the merrier of course.

But more on that as we move on.

Confused? Let’s simplify it a bit more!

Quite often, traders connect a series of ascending lows (known as bottoms) during a rally to form an up trendline. Similarly, during a downtrend, they connect a series of highs (known as tops) to reveal the underlying trend.

Much better ey? Good! Because in the next article we’ll be teaching you guys how to draw trendlines!

What’s a Trendline? | NAGA Learn

As you know, we have already talked about what a trend is, and how it may be identified in many ways such as the classic chart patterns, the moving average, the channel, and other cool techniques.

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What’s a Trendline?

Once upon a time, like, 30 years ago more or less, the only people who had access to trading the stock market were really rich investors, large financial companies, hedge funds etc.

Very simply put, only the “big guys” were allowed in the “trading playground”, while the rest sat there and watched. Well, not anymore!

Thanks to the massive evolution of technology and finance, we now have online trading with either very low commissions or no commissions at all, giving the rest of the world the “green light” into the “trading playground”.

So, today, if you have a smartphone (and you probably do!) you can enter the trading world with a simple “touch”! 

But what is trading exactly?

Well, trading has many different sectors. We have forex, which is the exchange of currencies, we have stocks which are the buying and selling of company shares, we have cryptocurrencies (you probably heard of bitcoin, ethereum etc), and so much more!

But this is just the tip of the iceberg… We’re only getting started!

Keep reading to find out more about the fascinating world of trading the financial markets!

What is Trading? | NAGA Learn

Once upon a time, like, 30 years ago more or less, the only people who had access to trading the stock market were really rich investors, large financial companies, hedge funds etc.

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What is Trading?

Yep, you read that right!

We put together the 5 basic steps you need to enter the trading world, whilst providing you with special tips for the ultimate trading experience.

Let’s dive in!

#### 1. Got a smartphone?
With today’s technology at our fingertips, anyone can trade. Literally, the very first thing you need is a smart device. You’re probably reading this article on one, such as your phone or laptop!

#### 2. Education is King
So, you got your smartphone/laptop ready, you got a pretty good WiFi connection too. What’s next? Well, learning the basics before you “jump right in” the trading boat would be the wise thing to do. NAGA for instance has an extraordinary rich pool of educational content such as videos, webinars, seminars, workshops, e-books etc. 

#### 3. Choosing your Broker
Usually, traders pick a broker based on certain criteria, such as its customer support, software, community, educational material etc. Fun fact, at NAGA we offer all of this stuff and more ;) 

Anyway, you should be able to choose a broker that offers you everything you need, not only in terms of quantity but, most importantly quality. After all, the first thing you should invest in is yourself and your knowledge. 

#### 4. No Emotions Allowed here!
We know the title sounds a bit harsh at first, but hear us out! The ability to control your emotions can work wonders when trading. It’s very important to “keep it together” and be focused when trading. Don’t let your ego take over your decisions!

#### 5. What’s the plan?
So you did your research, watched educational videos, went through some e-books, bla bla bla. What happens next? Well, this is where you put everything you learned into “action”.

Check out our next article to find out how to buy, sell, secure potential profit, and protect your funds as much as possible!

How to Start Trading in 5 Steps | NAGA Learn

Yep, you read that right!  We put together the 5 basic steps you need to enter the trading world, whilst providing you with special tips for the ultimate trading experience.

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How to Start Trading in 5 Steps

Okay, so you’re probably wondering how one can trade the financial markets. Well, you’ve come to the right place because we have all the answers!

Very simply put, when trading you gotta “buy low” and “sell high”.

**Let us give you an example!**

Let’s say you would like to buy Apple shares, and they’re currently at $10. So, after you buy shares worth $10, you wait for the shares to go up to let’s say $50. Now, if you sell it for $50, it means you’ve just made a $40 profit!

But when is the best time to buy? Now that’s where the “follow the trend” comes into the picture. We’ll tell you more about this in the next article.

**Now, what happens when the price goes down rather than going up? **

So, even though you bought $10 shares of Apple, it went down to $5. Well, in this unfortunate scenario you need to “get out” with the smallest possible loss. So, don’t wait for it to go all the way down to sell it.

Of course, you’ll hear us saying this pretty much all the time, use a protective stop loss! This way, even if you lose, the damage can be somewhat “tolerable”. Remember, trading is not always full of rainbows and unicorns, it also comes with risks! 

Additionally, you also need a good trading strategy. Don’t worry though, you can practice on a demo account until you’re comfortable experiencing the “real deal” with real money. (We don’t mean to brag, but NAGA’s one is pretty awesome!)
In the meantime, we can give you tips and tricks that will hopefully help you evolve!

Welcome to the trading world!

How to Trade the Financial Markets | NAGA Learn

Okay, so you’re probably wondering how one can trade the financial markets. Well, you’ve come to the right place because we have all the answers!

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How to Trade the Financial Markets

So, according to NAGA’s ultimate **glossary** for traders, “**trend**” is basically the direction of the market; up, down, or sideways.

Additionally, it is identified by looking at tops and bottoms. For example, in an uptrend, we see successive higher tops and higher bottoms, for a downtrend, successive lower tops and lower bottoms, and for a sideways market, successive equal tops and bottoms.

Okay, but now we have two new unknown words… Tops and bottoms!

Let’s explain this better.

Imagine a price chart where the prices are rising. Beautiful right?

To be precise, rising prices do not move in a straight line, but instead, they follow a zigzag path.

So, they move upwards then pull back a bit, and then move higher to continue this pattern.

“**Top**” is the highest price reached before prices pull back, while “**bottom**” is the lowest price reached before moving higher again.
Simple!

To put everything together, an uptrend is at least two consecutive higher tops and higher bottoms.

Similarly, a downtrend is defined as at least two lower tops and lower bottoms, and in a sideways market, at least two equal tops and bottoms.

Now, let’s move on to the uptrend! 


What is “Trend”? | NAGA Learn

So, according to NAGA’s ultimate glossary for traders, “trend” is basically the direction of the market; up, down, or sideways.

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What is “Trend”?

Now that we understand the concept of what a trend is, let’s take it one step further, shall we?

Remember that “**uptrend**” is defined as the direction of successive higher tops and higher bottoms and looks like a zigzag on the price chart? Great!

Now the question is, what is the minimum number of tops and bottoms needed to define an uptrend?

Well, the answer comes from Charles Dow himself: two successively higher tops and two successively higher bottoms.

So, similarly to Newton’s First Law of Motion, an object in motion will continue to move in the same direction until there is an opposing force acting upon it. Therefore, an uptrend will continue to move higher and higher until it reverses.

Is it guaranteed 100% that an uptrend will continue to move higher and higher?

Eh, not really. But it’s more likely to move higher than to reverse.

So, what is the more sensible thing to do during an uptrend?

If you thought of “buy”, then we’re with you!

Since the uptrend will most likely continue to move higher, a “sell” move wouldn’t be the wisest thing to do.

Ready to move on to the downtrend?
Let’s go!

What’s an “Uptrend”? | NAGA Learn

Now that we understand the concept of what a trend is, let’s take it one step further, shall we?

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What’s an “Uptrend”?

So, we’ve looked at Trend and Uptrend, but what about the **Downtrend**?

Similarly to the uptrend, the downtrend direction looks like a downwards zigzag path.

Now the question is, what is the minimum number of tops and bottoms needed to define a downtrend?

Well, the downtrend is defined by two successively lower tops and successively lower bottoms.
 
The keyword here is “successively” because a downtrend is more likely to continue to move lower and lower until it reverses.
 
Basically, it’s like the water in a river flowing downstream. It’s more likely to keep moving towards a downwards direction, right?

Perfect!

Now, we can place a sell trade to take advantage of this!

What’s a “Downtrend”? | NAGA Learn

So, we’ve looked at Trend and Uptrend, but what about the Downtrend?

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What’s a “Downtrend”?

So, we talked about the uptrend and the downtrend, but the trading magic doesn’t stop there!

Besides that, the market may be also following a sideways direction which is also known as trendless, range or flat market.

Fun fact, a sideways market may be viewed as “a wait and see” phase. 

This is basically when traders wait for some important events to happen before they carry on trading. For example, the release of important economic news or maybe a company’s announcements.

Another reason for a trendless market is the lack of interest by the traders and as a result, not only there is no direction but also the market is characterized by low volume.

Nevertheless, during a range, prices are confined between two boundaries, zones, or lines; the upper line and the lower line.
Remember that to draw a straight line, we need two points.

So, in our example, a minimum of two tops and two bottoms are needed.

![6.1.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/6_1_921b6175a1.png)

The lower boundary acts as a support to the falling prices, whereas the upper boundary acts as a resistance to the rising prices.
So, after the prices reach the upper boundary what do you think will happen next?

Well, they may rebound back to the lower boundary, and when prices reach the support area prices may bounce up to the upper boundary.

Now if that isn’t cool, we dunno what is!

What’s the “sideways” direction? | NAGA Learn

So, we talked about the uptrend and the downtrend, but the trading magic doesn’t stop there!

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What’s the “sideways” direction?

Get your A,B,Cs of trading in a series of lessons on NAGA Learn's introduction. Take the first step now and see where your trading journey takes you.

Introduction (The A,B,Cs of Trading) | NAGA Learn

Introduction

(The A,B,Cs of Trading)

Our motto at NAGA Education is “Invest in yourself before investing in the markets”.

The reason behind this is that not many people understand how important education is in the trading industry. 

Forex is usually glamorized on the internet and the media in general. After all, it is the biggest market in the world!

Especially on social media, we see investors driving fancy cars, living a luxurious life with yachts and money, and jets, you name it.

Of course, there is risk involved like any other investment activity, but don’t get discouraged! Besides, you wouldn’t start flying a plane without having a pilot’s license, right? Similarly, you shouldn’t jump into trading without knowing a thing or two! 

This is where we come in.

In our next series of articles, we’ll be looking at the basic forex terminology, explaining everything you need to know step by step.

All aboard? 

Let’s go!

The biggest market in the world | NAGA Learn

Our motto at NAGA Education is “Invest in yourself before investing in the markets”.

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The biggest market in the world

You might have noticed a hype lately around words like “**forex**”, “**trading**”, “**bitcoin**”, and so on. But what does forex even mean, and what’s the hype all about?

Well, in simple words, Forex means “*Foreign Exchange*”, which is basically currency exchange. 

Now, foreign exchange is the ability to trade one currency for another. Let’s say you’re living in a European country that uses the Euro as currency, but you wanna travel to the US for holidays. In this case, the only way to actually pay for stuff in the US is by doing so in US dollars. So, you have to exchange your Euro for USD.

Now, maybe you noticed that since we are headed towards a cashless economy, when you pay via card or your phone, this “exchange” is done automatically. How cool is that?

There’s some basic stuff you should know about forex though, especially if you’re considering it as a “trading” option.
Let’s go!

#### 1. We trade currency pairs
So, in forex, we trade currency pairs. For example, one of the most popular currency pairs is the EUR/USD, as it represents two of the biggest economies of the world. Other popular currency pairs are: the British Pound or Pound Sterling (GBP) VS the US Dollar (USD), the Australian Dollar (AUD) VS the US Dollar (USD), and a couple more that we’ll be reviewing in our next article!

#### 2. We use forex (literally) all the time
We actually “trade” forex more than we think. Every time you buy something online from a country with a different currency, you’re exchanging one currency for the other.

Additionally, many companies pay their overseas employees in their local currency. So, they need to exchange money from one currency to another for payroll purposes!

#### 3. It's kind of a big deal
Foreign exchange is very important for cross-border trade, investments, and transactions in general. Additionally, traders want to benefit from the “ups and downs” of prices, by “buying low”, and “selling high”, just like any other trade! You buy an item at a certain price to sell it higher for a profit.

#### 4. Liquidity 
What’s really cool about trading forex is its liquidity. This is basically the ability to buy and sell a currency pair, almost anytime. What this means is that high liquidity in a financial market allows for faster transaction flow and more competitive pricing.

#### 5. Bidirectional trading
In trading the motto is usually “buy low, sell high”. What we mean by this is that if the market is going up (ie uptrend), you could buy or “go long”, to benefit from the rally/trend. Similarly, if the market is going down (ie downtrend) you can sell or “go short”, in order to benefit from the decline. 

This is an advantage of forex trading, as “shorting” is not available in all financial markets (i.e. stock market, cryptocurrencies).

#### 6. Leverage
Leverage is a pretty cool financial tool that allows traders to control more capital than what they originally deposited. Now, the interesting part is that any potential profit will be multiplied for the trader, but so will the risk and loss. So although this tool can be pretty handy, you need to use it very wisely!

#### 7. Open 24/5
Last but not least, another cool thing about the forex market is that it's open 24 hours a day, five days a week, from Monday to Friday. So, basically, you can trade pretty much anytime you want during the weekday!

Why trade Forex? | NAGA Learn

You might have noticed a hype lately around words like “forex”, “trading”, “bitcoin”, and so on. But what does forex even mean, and what’s the hype all about?

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Why trade Forex?

In our previous article, we talked about the Euro and US Dollar, and how they’re the main characters of the forex world. There are, however, some other currency pairs that are just as popular, and they’re known as the Majors.

Let’s have a look, shall we?
- USDJPY, also known as US Dollar - Japanese Yen. 
- GBPUSD, which is the British Pound (or Pound Sterling) VS the US Dollar
- AUDUSD, meaning the Australian Dollar VS the US Dollar
- USDCAD, which is the US Dollar VS the Canadian Dollar
- NZDUSD, which is the New Zealand Dollar VS the US Dollar
- USDCHF, the US Dollar vs the Swiss Franc

These currency buddies though, also share some characteristics, such as:
- They are very liquid, meaning that you can buy big amounts any time of the day.
- The cost of trading the Majors is relatively low compared to other currency pairs.
- They are not very volatile, which means that sharp price swings are not very common for their exchange rate.

**Fun fact:** Did you know that the Majors also have their own nicknames?

For example, the EURUSD is known as Fiber, and the USDJPY is known as the Ninja. Also, the USDCAD is called Loonie, which originates from a bird in Canada that looks like a duck, called a Loon. 

Moving on, the AUDUSD is also known as Aussie (that’s pretty straightforward though, right?).

Additionally, the GBPUSD is called cable, because of the cable in the Atlantic Ocean that was used to connect London and New York for telecommunication purposes.

Last but not least, the NZDUSD is known as “Kiwi”, which although one might think it comes from the fruit, it’s actually a popular featherless bird!

Now you know the popular currency pairs!

Which are the Popular Currency Pairs? | NAGA Learn

In our previous article, we talked about the Euro and US Dollar, and how they’re the main characters of the forex world. There are, however, some other currency pairs that are just as popular, and they’re known as the Majors.

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Which are the Popular Currency Pairs?

So, in our previous article, we had a look at the popular currency pairs (the Majors), as well as their main characteristics and nicknames.
 
We didn’t point out, however, a very significant similarity between those pairs. 

They were all linked with the US Dollar! 

Yeah, this kinda makes sense since the US Dollar is like the “Prom Queen” of currencies, but what about other currency pairs?

Well, let’s explore two more groups of currencies; the Crosses and the Exotics.

#### The Crosses
The Crosses basically don’t have the US Dollar as one of the two currencies, and they are more volatile compared to the Majors with wider price movements. Crosses can be also more expensive to trade compared to the Majors.

Some examples of Crosses, are:
- EURGBP (Euro - British Pound)
- GBPJPY (British Pound - Japanese Yen)
- AUDNZD (Australian Dollar - New Zealand Dollar)
- EURCHF (Euro - Swiss Franc)

#### The Exotics
Now, let’s move on to the Exotics. This category consists of one of the Major currencies and a currency of a developing economy, such as:
- EURZAR (Euro - South African Rand)
- USDMXN (US Dollar - Mexican Peso)
- GBPHUF (British Pound - Hungarian Forint)
- USDTRY (US Dollar - Turkish Lira)
 
Interestingly, Exotics are more volatile, and thus riskier to trade. So the cost of trading is higher compared to the Majors and the Crosses. Of course, as they say, the higher the risk, the higher the return.

But nonetheless, you should trade sensibly, carefully and always protect your capital!

What are Crosses and Exotics? | NAGA Learn

So, in our previous article, we had a look at the popular currency pairs (the Majors), as well as their main characteristics and nicknames.

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What are Crosses and Exotics?

So far, we looked at what trading is, the basics of how to do it, as well as the main objectives of the industry. But one question remains unanswered: when should you trade? 

Well, we previously mentioned that the forex market is open 24/5, but before choosing the “right time” to trade, we first need to have a look at the trading sessions in general.

There are four main trading sessions in forex, and they consist of the Sydney session, the Tokyo session, the London session, and the New York session. Traders usually like to focus on the high activity trading sessions, rather than trade 24 hours a day.

Now, the market, besides weekends, is also closed on Christmas Day, and New Year’s. Everyone deserves some holidays, after all, even the markets!

Let’s have a look at the open and close times for each session.

![4.1.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/4_1_07bddff627.png)

The open and close times of each location are usually based on their local business hours, so their trading day begins between 7 and 9 AM local time.

#### Overlapping
You might have noticed that some trading sessions seem to overlap. What does this mean?

Well, some traders tend to start trading during that overlap, because that’s when there’s a lot of movement going on in the market.

![4.2.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/4_2_09421b95f7.png)

Now you know the forex trading sessions!


The Four Forex Trading Sessions | NAGA Learn

So far, we looked at what trading is, the basics of how to do it, as well as the main objectives of the industry. But one question remains unanswered: when should you trade? 

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The Four Forex Trading Sessions

Ever wondered how big the forex market is? You might be shocked!
The foreign exchange market is actually the largest one in the world (yes, bigger than the stock market!) with a daily volume of $6.3 trillion according to a 2019 study.

If you want to visualise the size, let us just tell you that if you have a tower made of $6.3 trillion, it would be 3+ times taller than the Statue of Liberty in the US! Impressive, no?

Now you might be wondering, since forex is all about currencies, which were the most traded currencies of the year? Well, we got you covered! Check out the top 10 traded currency pairs.

![5.1.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/5_1_c0fe8b1379.png)

Nevertheless, the foreign exchange market seems to be growing fast over time, as it grew even more over the years.

![5.2.png](https://s3.eu-west-1.amazonaws.com/blog.naga.com-storage/5_2_5e9ddeb96b.png)

This could mean that the forex future is even more promising!

How Big is the Forex market? | NAGA Learn

Ever wondered how big the forex market is? You might be shocked! The foreign exchange market is actually the largest one in the world (yes, bigger than the stock market!) with a daily volume of $6.3 trillion according to a 2019 study.

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How Big is the Forex market?

Learn everything about the biggest market on Forex Basics. How big is it, what are the main currency pairs, and more. Start learning today on NAGA Learn. 

The biggest market in the world - Forex Basics | NAGA Learn

(Forex Basics)

At the beginning of this fascinating trading journey, we said that we wanna teach you everything you need to know in order to enrich your trading knowledge.

Well, sure thing we like to keep our promises!

In this next chapter we will be looking at some really important trading terms, that even though they might not seem as significant right now, we promise you they’ll come in handy.

At the end of the day, how will you be able to invest your money and time, if you don’t invest in knowledge first?

This is exactly why we want to take you through everything step by step, term by term. So, take notes, everyone, because we’re about to enter a whole new trading world very shortly!

Here’s what we will be learning in yet another awesome module!

- What’s Base and Quote currency?
- What’s Bid and Ask price?
- What does PIP mean?
- What’s a Lot?
- How do we calculate the value of a PIP?

All these questions will be answered in our next series of articles!

Let’s go!


Why learn so many trading terms? | NAGA Learn

At the beginning of this fascinating trading journey, we said that we wanna teach you everything you need to know in order to enrich your trading knowledge.

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Why learn so many trading terms?

You’ve been doing an amazing job so far learning about the fantastic world of forex! 
Last time we had a look at currency pairs, but we wanna take it a step further. So, let’s move on to a couple more terms, shall we?

#### The BASE-ics
The first currency in a pair is called the base currency, and the second one is called the quote, or counter currency.

So, when we talk about the exchange rate of a currency pair, we actually mean how many units of the quote currency are needed to buy one unit of the base currency. Confused? Let us give you an example.

Let’s say the exchange rate of the EUR/USD is 1.2200. What does that mean? Well, very simply put, it means that 1.22 US Dollars are needed to buy 1 Euro.

Here’s another example: what if the exchange rate of AUD/USD is 0.79? Again, this means that 0.79 of a US Dollar is needed to buy 1 Australian Dollar! Excellent!

Now you know what the Base and Quote currency is!


What’s the Base and Quote Currency? | NAGA Learn

You’ve been doing an amazing job so far learning about the fantastic world of forex!  Last time we had a look at currency pairs, but we wanna take it a step further. So, let’s move on to a couple more terms, shall we?

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What’s the Base and Quote Currency?

You now know what the base and quote currency is in forex trading, but let’s kick it up a notch!
Have you heard of the terms “Bid” and “Ask” before? Well, if you haven’t you probably will very soon, so allow us to enlighten you!

Basically, when we buy or sell a currency pair what we’re really doing is buying or selling the base currency. 

Therefore, there are two prices: a price to buy the base currency, and a price to sell the base currency. 

Now, the Ask price is the price to buy the base currency at, and the Bid price is the price to sell the base currency for.

Let’s have a look at an example!

Say, the EUR/USD Ask price is at 1.22216, and the Bid price is at 1.22200. This means, that to buy the EUR/USD we are going to use the corresponding Ask price, which here is 1.22216, and to sell the EUR/USD the Bid price is 1.22200. 

Not that complicated, right?

Also, FYI, the difference between the Ask and the Bid price is called the spread. This spread is basically the cost of trading the corresponding currency pair. Based on our example above, the spread is 1.22216 minus 1.22200 which equals 0.00016, and this is the actual cost for trading the EUR/USD!

Now you know another set of forex basics!


What’s Bid and Ask Price? | NAGA Learn

You now know what the base and quote currency is in forex trading, but let’s kick it up a notch! Have you heard of the terms “Bid” and “Ask” before? Well, if you haven’t you probably will very soon, so allow us to enlighten you!

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What’s Bid and Ask Price?

When you first hear it, it reminds you of a funny sound, doesn’t it? “PIP!”
In the trading world, however, weirdly enough, it doesn’t only mean something, but it’s also pretty important!

Specifically, pip stands for: 
- Percentage in point 
- Point in percentage
- Price interest point

Not clear enough eh? 

Well then, in simpler words, a pip is a measure of the exchange rate’s movements, meaning it measures the change/difference of the exchange rate! In other words, it measures the up and down movements of the price. 
Interestingly, traders often measure their profit and loss in pips. So, you might hear a trader sometimes be like “I made 50 pips!” or something like that. 

Now, let’s have a look at a better example of what a pip actually is.

So, the exchange rate of the EUR/USD is quoted in 5 decimal digits.

But let’s say that the exchange rate moved from 1.20100 to 1.20190. 

This means that it gained 9 pips!

In simple words? the pip corresponds to the 4th digit after the decimal point, and this is the case with almost all currency pairs.
The exception is the Japanese yen, which is measured in 3 decimal places.

For example, if the exchange rate of the USD/JPY is 115.000, and it moves to 115.080, then it simply gained 8 pips. 
In this case, the pip here corresponds to the second digit after the decimal point.

Fun fact, this is also true for the currency pairs that involve the Hungarian Forint!

You now know what the pip is and how it’s measured!

What is a PIP? | NAGA Learn

When you first hear it, it reminds you of a funny sound, doesn’t it? “PIP!” In the trading world, however, weirdly enough, it doesn’t only mean something, but it’s also pretty important!

What is a PIP?

All the Forex basics to start trading currencies. Bid/Ask Price, Pips, Lots, Base/Quote, and more. Enter NAGA Learn and grow your trading knowledge!