Pip and pips
‘Pip’ stands for ‘percentage in point’. It is a measure for the movement of an exchange range that helps traders to measure profit and loss. 1 pip = 0.0001. When traders discuss their success in deals, they typically say: “I made 20 pips on this trade”, not “I made $20 on this trade.”
Spread and Tight Spreads
This is the difference between bid and ask prices of any asset, and it’s measured in pips. Here is the spread formula:
If we say “tight spreads”, we mean that this difference is not large. As prices don’t stand still, spreads are variable. However, A1 Capitals always looks for the best spreads for its clients.
Leverage and Leveraged Trading
It is a loan amount traders can use to access larger sums for their deals. So, if you have a 100:1 leverage, you can trade $100.000 when having deposited only $1000. Be careful with such trading, as you can either benefit from it and multiply your capital, or lose more than you can afford in seconds.
Margins and Margin Call
A margin is required for trading on the Forex market. It is a minimum deposit per deal with which you can start leveraged trading. You can calculate the margin for your leveraged trading using this formula:
A ‘Margin call’ is a notification telling you that you have not enough money to continue open trades.
This is the difference between the planned and the execution price. Slippage happens due to market volatility and a lack of execution speed. Its outcomes can be positive (when you win more) and negative (when you lose part of the funds you were aiming to get).
These indicators are basically statistics on the economic activities in world countries. Traiders use them to forecast the future economic state, and consequently, the assets’ price movements. They firstly affect the prices when announced, and then when compared to what speculations were conducted before.
Types of Indicators
They differ from each other in their target audience, country of origin, and the impact on financial markets. For example, there are Asian, US, and European indicators; daily, monthly or quarterly ones.
Here are several examples of economic indicators:
These indicators typically affect only their own markets. For example, increasing income levels can lead to inflation, and a decrease in the unemployment rate can lead to better currency stability.
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