PIP expands as "percentage in point" and is explained as the smallest increment of trade in Forex.
While talking about Forex market, we know that prices are being quoted to the fourth decimal point.
The alteration in that fourth decimal point is known as 1PIP and is generally equal to 1/100th of 1%.
Japanese Yen is the only exception among all the countries.
If we consider a currency pair EUR/USD, the EUR is base currency and USD is quoted currency. The
base currency is the currency which is sold to purchase the quoted currency, in order to get profited.
It depends on the retailers that which currency do they want to use but some of the very common
currency pairs used while trading are:
USD/JPY (dollar/Japanese yen)
GBP/USD (British pound/dollar)
USD/CHF (dollar/Swiss franc)
& most common commodity pairs are:
AUD/USD (Australian dollar/dollar)
USD/CAD (dollar/Canadian dollar)
NZD/USD (New Zealand dollar/dollar)
The Currency Pairs described above can be used in different combinations.
For example, EUR can be used with JPY and vice versa.
Arbitrage is a term, used in a process where a security or commodity is bought from one market and
then is sold to another market at the same time by earning profit. The concept is that the security is
sold in higher price than that of the buying price. Arbitrage is a kind of benefit earned without
concerning about the risk factor, that’s why used the most by traders/investors.
In every possible way of forex trading, everything is performed via mediators who charge a specific
amount for their services. This charging fee or difference between the bidding prices is known as “forex
The minimum investment amount when you deal with PCM is $100. There is no boundation for
maximum investment. One can invest to any extent he/she is convenient to. Our adviser can avail you
with further information.
An interest rate differential can be defined as the difference in interest rates between two currency
pairs. For example, if we consider one currency pair having one currency with an interest rate of 5%
and other currency with an interest rate of 2%, then the difference between the interest rates will be
3% and this 3% difference will be known as interest rate differential.
It is the difference between the existing balance of your account and a net balance of your account.
When the net balance of your account is less than your account balance, then the condition of
A forex brokerage establishes a bridge for forex traders to reach to the forex market. A forex
brokerage proposes you with an idea to get into the forex trading via banking, buying currency pairs
and other requirements.
When you go with a demo account, there is no capital on risk. When one deals within demo account,
then he/she deals by the means of virtual money. If one gets satisfied while dealing in demo account,
then only live account is being opened. Live account is the medium when you deal on real time basis.
Withdrawals are initiated in the same order funds are received and refunded to the corresponding
account either via credit/debit cards or via wire transfer. Wire transfer takes more time to process
than that of credit/debit cards.
It is very easy to understand the difference between forex and commodity trading. In forex trading,
dealings among currencies are performed globally. In case of commodity trading, dealings among the
manufactured goods are performed.
An Expert Advisor can be described as a kind of software designed exclusively for the MetaTrader
Platform. An Expert Advisor counsels traders about the favorable markets to invest in and also with
the methodology to go with a live account.
A mini lot is basically a lot of 10,000 units of a particular country's base currency. It is known so
because it is only 1/10th part of the size of a 100,000 unit standard lot. For example, let’s consider
trading in US Dollars and then a mini lot can be defined as a trade worth $10,000 of USD. A mini lot is
used in a forex mini account.
Forex Trading is not centralized at a particular place. The forex market is considered as an Over the
Counter (OTC) market whose basis is dealing interbank because the transactions are made between
two ends over the telephone or via an electronic medium.
The Forex Trade is an 'Interbank' trade which includes central banks, commercial banks as well as
investment banks. But with its increasing demand, it now involves multinational corporations, global
money managers, registered dealers, international money brokers, futures and options traders and
also private speculators.
Overnight position is a position which continues to exist till the finishing of usual trading hours that is
dragged in by your Forex broker to the following day's price.
In a long position, a trader purchases a currency at a specific price and intends to sell it at a time
when he will be getting a higher price for the same. In a short position, the trader sells a currency in
expectancy that it will abate. In this position, the trader gets profited from a decreasing market.
Intraday positions are the ones that being opened and closed anytime during usual trading.
Currency pricing is changed by changing economic and political conditions as well as by interest rates
It is one of the risk management tools. A limit offer keeps limitations or restrictions on the maximum
price to be given or the minimum price to be taken.
It is another technique to be used for minimizing the effects of risks. A stop loss order creates a
specific position which accordingly establishes a calculated price to minimize potential losses.
Technical traders use charts, trend lines, numerous patterns, resistance levels and mathematical
analyses to know trading events.
It is an order that closes your trade when it reaches a specific level of profit achievement. When a
market sustains this particular, then dealing is closed at the present market value.
The carry trade strategy depends on the fact that each currency involved in the trading, has an
interest rate. Every investor who wants to succeed invests in a currency with higher interest rate and
deals it in comparison of a currency with lower interest rate.
CFD can be expanded as “Contracts for Difference”. CFD is really essential financial as well as trading
instrument which offers traders to cerebrate about the increasing or decreasing prices of currencies,
stocks, indices and commodities without a requirement of acquiring an asset.
MetaTrader is a platform availed by MetaQuotes Software which offers online trading in the CFD,
forecasting as well as Forex Trading. MT4 and MT5 are two platforms associated to MetaTrader.
Scalping is actually a speedy day-trading strategy in which the positions are enrolled within certain
seconds and minutes. Trading is accomplished quickly and scalpers will to achieve the smallest
intraday price movement to make most benefit out of the trade.
Realized profit comes after a finished trade. Realized profit is normally already deposited into the
investor’s trading account and can be taken out from their trading account to a bank account.
There are two types of charts that are basically used in Forex Trading: