Forex trading is the trading of foreign currencies. Currencies like the U.S. dollar (USD)Euro (EUR)Canadian dollar (CAD)British pound (GBP)Australian dollar (AUD), New Zealand dollar (NZD), Swiss franc and many others freely float in value against each other in financial instruments known as currency pairs. For example, a commonly traded currency pair is EUR/USD, which pits the Euro against the U.S. dollar. When the Euro goes up in value against the U.S. dollar, EUR/USD will go up. When the U.S. dollar rises in value compared to the Euro, the EUR/USD will go down.

Is a pip the base metric in Forex trading? What is a pip?

A pip is the smallest indivisible unit in the Forex market. You will often hear or read about a 20-pip move or a 50-pip move. Most Forex pairs are expressed with four digits after the decimal point. But those with Japanese Yen (JPY) as the second currency in the pair are expressed with only two digits after the decimal point. So, for example, a pip of USD/JPY is .01, while for EUR/USD, the pip is .0001.