What is a lot, pip, candle and leverage/margin?

lot,pip,candle,leverage,margin

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Forex

What is a LOT

A lot is the smallest trade size available. Bulls accounts have a standard lot size of 1,000 units of currency. Account holders can however place trades of different sizes, so long as they are in increments of 1,000 units like, 2,000, 3,000, 15,000, 112,000 etc.

What is a PIP?

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A pip is the unit you count profit or loss in. Most currency pairs, except Japanese yen pairs, are quoted to four decimal places. This fourth spot after the decimal point (at one 100th of a cent) is typically what one watches to count „pips”. Every point that place in the quote moves is 1 pip of movement. For example, if the EUR/USD rises from 1.4022 to 1.4027, the EUR/USD has risen 5 pips.

The dialgram below shows the image of how currencies [EURUSD] are traded in MetaTrader platform.

what is a pip

WHAT IS CANDLE STICK?

Candle stick is a combination of both line and bar chart which is used in MetaTrader to determine the price movements of currencies traded over time in forex trading platform.

CANDLE STICK

What is Leverage/Margin

FOR EXAMPLE:
USD/JPY MARKET PRICE: 98.00, LOT SIZE: 0.10, PROFIT/LOSS IN PIPS: 1,
ACTUAL MARGIN REQUIRES: 10000USD REQUIRE FOR TRADING BUY OR SELL USD/JPY 0.10 LOT
LEVERAGE 1:100 MEANS, 10000/100=>100 USD IS REQUIRED FOR TRADING BUY OR SELL USD/JPY 0.10 LOT
LEVERAGE 1:200 MEANS, 10000/200=>50 USD IS REQUIRED FOR TRADING BUY OR SELL USD/JPY 0.10 LOT

Above example means that you can take advantage of even the smallest movements in currencies by controlling more money in the market than you have in your account. On the other hand, leverage can significantly increase your losses. Trading foreign exchange with any level of leverage may not be suitable for all investors.

The specific amount that you are required to put aside to hold a position is referred to as your margin requirement. Margin can be thought of as a good faith deposit required to maintain open positions. This is not a fee or a transaction cost, it is simply a portion of your account equity set aside and allocated as a margin deposit