What is Pips?
It is
very important that you understand what a pip is in the Forex trading because
you will be using pips in calculating your profits and losses. A “pip” stands
for “Percentage in Point”. A pip is the smallest price movement of a traded
currency. It is also referred to as a “point”.
For
most currencies a pip is 0.0001 or 1/100 of a cent. You may think it is a
ridiculously low value. However, take into account that most currencies are
traded in lots of $100 000. For that amount a pip is $10. The study of Forex is
termed as Pipsology
What is
Bid-Ask Spread?
The amount by which the ask price exceeds the bid. This is
essentially the difference in price between the highest price that a buyer
is willing to pay for an asset and the lowest price for which a seller is
willing to sell it.
For example, if the bid price is $20 and the ask price is $21 then the "bid-ask spread" is $1. currency is considered the most liquid asset in the world and the bid-ask spread in the currency market is one of the smallest (one-hundredth of a percent).
For example, if the bid price is $20 and the ask price is $21 then the "bid-ask spread" is $1. currency is considered the most liquid asset in the world and the bid-ask spread in the currency market is one of the smallest (one-hundredth of a percent).
