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Basic Trminologies

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24 views

Basic Trminologies

Uploaded by

PSX Technical Analysis
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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LECTURE

BASIC
TERMINOLIGIES

Mentor: M JAVED
WHAT IS
PIP
In forex trading, a "pip" stands for
"percentage in point
It's the smallest price movement that a
currency exchange rate can make based on
market convention. For most currency pairs,
a pip is equivalent to 0.0001, or one-
hundredth of a percent.

100 PIPs move=1 %


WHAT IS
BID PRICE & ASK PRICE

Bid Price:
The price at which the market is prepared to
buy a currency pair. This is the price at which
traders can sell the base currency.

Ask Price:
The price at which the market is prepared to
sell a currency pair. This is the price at which
traders can buy the base currency.
WHAT IS
SPREAD

The difference between the bid price and


the ask price of an asset. It represents the
cost of trading and is typically measured in
pips.

Spread is calculated by subtracting BID


PRICE form ASK PRICE.
WHAT IS
MARGIN
Margin in forex is a deposit that an investor
needs to make a position and keep it open.

When you open a trade,the margin is


“locked” untill the trade is closed or in
profit.
WHAT IS

BASE CURRENCY
QUOTE CURRENCY
Base Currency: The first currency in a
currency pair, which determines the value
of the pair. It is typically the currency
being bought or sold.

Quote Currency: The second currency in a


currency pair, which represents the value
of the base currency.
WHAT IS
SLIPPAGE
The difference between the expected price of a trade
and the price at which the trade is actually executed is
called SLIPPAGE.

Market Volatility:
It typically occurs during times of high market
volatility,specifically during news release.

Low Liquidity:
Slippage tends to be more common in less liquid
markets or during periods of low liquidity when there
are fewer buyers and sellers in the market.
WHAT IS
LEVERAGE
The ability to control a large position in the market with
a relatively small amount of capital. Leverage amplifies
both profits and losses.

For example, let's say you have $1,000 in your trading


account, and you want to trade a standard lot of 100,000
units of a currency pair. Without leverage, you would
need the full $100,000 to control this position. However,
with leverage, your broker may allow you to control this
position with only a fraction of the total value, say 50:1
leverage. This means you would only need to deposit
$2,000 (2% of $100,000) as margin to open this trade.
WHAT IS
MAJOR CURRENCY PAIRS
& CROSS PAIRS
Major Currency Pairs: The most traded
currency pairs in the forex market, which
include EUR/USD, USD/JPY, GBP/USD,
and USD/CHF.

Cross Currency Pair: A currency pair that


does not include the US dollar. Examples
include EUR/GBP, AUD/JPY, and GBP/JPY.
THANK YOU

03125797979 Trading Edge FX

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