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  1. #1
    Administrator
    Join Date
    Apr 2018
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    PIPS, LOTS & LEVERAGE

    WHY ARE CURRENCY PAIR PRICES DISPLAYED WITH
    FIVE DECIMAL PLACES?

    Typically in forex, currency pairs display their prices with
    four decimal points. A few, such as the Japanese yen,
    display two decimal places. No matter what currency
    pair you’re trading, the last large number behind the
    decimal always represents a pip, the main unit price that
    can change for the currency pair. As you trade, you’ll
    track your profits (or losses) in pips.
    A smaller number behind the pip—this is called a “fractional pip” and offers even
    more precise pricing. Sometimes, the fractional pip will be a 0—that is, there will be no fraction of a pip
    being quoted at that time. One unit of movement represents one pip. That may seem small and you may be
    wondering how forex can be worthwhile if all you’re speculating on is a small fraction of a currency. Since
    forex is traded in large volumes, called lots, these fractions of a cent can add up very quickly. Quite simply, the
    higher volume you trade the more each pip will be valued.


    A lot is a standard unit of measurement. At most forex dealers, one standard lot usually equals 100,000
    worth of currency. You are able to trade in intervals of 1,000 units, but you are not required to
    invest $1,000 to do so because forex is leveraged. Whenever you place a trade, you start with your desired
    volume. Let’s say 10,000 for this next example.


    One of the benefits of this market is the ability to trade on leverage. You don’t need $10,000 in your account to
    trade the EUR/USD. Currency pairs can have a leverage ratio of up to 50:1. This means you can control a large
    position ($10,000) with a small amount of money ($250).
    Many traders find the leverage that most forex dealers offer very appealing. Nonetheless, you should know that
    trading this way can also be risky. It can produce substantial profits as easily as it can cause substantial losses.

  2. #2
    Senior Trader
    Join Date
    Mar 2015
    Posts
    449
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    My Language
    English
    Really, trading leverage is one of the most important trading feature for the retail Forex traders. But it’s very unfortunate that, a number of new traders don’t know how to use the leverage feature. Listen, without proper trading plan, there is no value. Besides, using a aggressive trading leverage feature will be costly. Whatever, in my trading I am working with 1:100 trading leverage.

  3. ARIONFORXtarder
 

 

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