Leverage & Margin - Trading on Margin

Leverage and margin is a very important concept to understand, because leverage can get you in trouble pretty quickly if not used properly. That being said, if leverage is applied properly, it can increase the profitability of your trading strategies.

Leverage trading, or trading on margin, means you aren't required to put up the full value of the position. As a result, you can open a significantly larger position that you would be able to if you needed to fund your trade in full. Trading on leverage increases your potential for profit, but also increases your risks.

Forex trading offers leverage up to 200:1, This means that for every £1 in your account, you can trade £200 worth of a position.

What's a pip?

Discover what a pip is, what its value is, and how it is used to calculate profit and loss, plus review examples of currency price movements to put it all in context.

Forex prices are generally very liquid, and are usually quoted in very small increments called pips, or "percentage in point". A pip refers to the fourth decimal point out, or 1/100th of 1%.

For Japanese yen, pips refer to the second decimal point. This is the only exception among the major currencies.

Pips

“PIP” stands for Point In Percentage. More simply though, a pip is what we in the FX world consider a “point” for calculating profits and losses. In a standard (10k) account, each pip is worth roughly one unit of the currency in which your account is denominated. If your account is denominated in USD, for example, each pip (depending on the currency pair) is worth about $1. In a micro account, each pip is worth roughly 1/10th the amount it would be worth in a standard account -- so about $0.10.

Understanding Forex Quotes

Find out how to read and interpret a Forex quote, the difference between base currencies and counter currencies and bid and ask prices.

Reading a foreign exchange quote is simple if you remember two things:
1. The first currency listed is the base currency
2. The value of the base currency is always 1.

Three easiest pairs are: EUR/USD, USD/JPY and GBP/USD

EUR/USD - most popular pair with the lowest spread. This pair is an ideal choice for beginners, since it responds quite well to basic technical studies and rules, which traders learn in the beginning. EUR/USD is not too volatile under normal market conditions and, thus, can be traded safely with lesser risks and closer stops.

From the fundamental point of view EUR/USD gets lots of global economic coverage, it is an easy to follow and monitor pair.

USD/JPY is another good currency pair. It often has the same low spread as EUR/USD, which makes it attractive to investors. USD/JPY pair features much smoother trends, comparing to other pairs; this makes trading USD/JPY during trends a real joy, not to mention the fact of earning profits alongside.

Which Currencies Can I Trade?

What is a currency pair? Which pairs are most frequently traded? Discover these answers and explore the differences between the major and the cross currency pairs.

What currency pairs to trade in Forex?

Although there is lots of currency pairs offered to Forex traders, if you are a beginner it is easier to start with major currency pairs:

EUR/USD

GBP/USD

USD/JPY

There are several good reasons for that:

Why trade Forex with us?

You Know:
Interest Free Accounts

Hedging Allowed

Spread as low as 1 pip

Leverage up to 1:500

No Commission

Accounts from $100

Free Trading Signals & Alerts

MT4 Trading Platform
So Why trade Forex with us?
FOREX — The currency market or  foreign exchange market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world.