1

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.”

2

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:

Bid (Sell) price
-
Ask (Buy) price.
=
Spread

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.

3

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.

4

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:

The Entire Lot Size
/
Leverage Amount
=
Margin

A ‘Margin call’ is a notification telling you that you have not enough money to continue open trades.

5

Slippage

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).

6

Economic Indicators

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:

Gross Domestic Product (GDP)
Consumer price index (Inflation rate)
Currency stability
Interest rates
Income and wage levels
Unemployment rate
Building permits
Corporate profit
Federal funds rate
Trade balance

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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The A1Capitals brand and company is owned and operated by Fenix Group Ltd. Please note that Fenix Group Ltd is an international company providing services to customers from different countries. By continuing your work on the Company`s platform you agree that the Company's laws of jurisdiction apply to your relations with the Company.

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Risk warning

Trading CFDs and spot contracts involves a high level of risk. CFDs trading may not be suitable for you. Therefore, make sure that you fully take into account all financial and legal aspects and accept the risk of loss that may occur in the investment process. If necessary you should seek legal advice.

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