What are the terms "spread" and "pip" in currency trading, and how they detremine cost of trading? - currency spread trading
If you have an exchange (forex, stocks, options, etc.), there is an offer and the price and supply. The offer is the price you can sell your piece and ask (sometimes called the bid) is the price you can purchase a gift. The offer is almost always less than that - so if you buy and immediately sell, you lose money. The difference between the two is like the hallway and the liquidity providers earn money. This difference is called the spread.
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A pip is the smallest increase in prices in the Forex market - PIP represents the percentage point.
Prices are listed in the fourth decimal currency markets - eg EUR / USD 1.1914 and the supply can be offered at 1.1917. In this example we can see that the spread of 3 pips. The Japanese Yen (JPY) is an exception - which is quoted only to two decimal places.
Thursday, January 14, 2010
Currency Spread Trading What Are The Terms "spread" And "pip" In Currency Trading, And How They Detremine Cost Of Trading?
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A dollar is a hundred cents. One hundred is a hundred "disturbances" The Pip is a hundred ticks. The only difference is the margin that the lender is. So, if the interbank rate of GBP / USD 1.6560 and 1.6520 is offered, its distribution is 40 pips.
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