Forex for individuals

Pairs and pips

A pair such as EUR/USD is the price of one euro in dollars. A pip is a convention for the size of a move, usually the fourth decimal for many major pairs, and the second for pairs involving the yen. The money value of a pip depends on the contract size. That is why the calculator on this site asks you for pip value instead of pretending it knows your broker’s contract.

The contract you actually have

Retail platforms often offer a CFD or a rolling spot position that never delivers the foreign currency into your bank. You post margin. You pay or receive a financing adjustment based on the rate differential and the firm’s charge. You can be closed out. None of that happens when a fund simply converts pounds to dollars to buy a US share, which is a one-off FX transaction.

A narrower use

If your only need is to buy an overseas investment, compare the conversion charge and whether the platform lets you hold the foreign cash. Speculating on the rate is a separate decision and a poorer default. Major-pair liquidity is deepest during London and New York hours and thin at the edges of the week.