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What are pips and margin in Forex Market?

By Auto Forex Trader  On May 12, 2010 In forex knowledge Tagged account margin, forex market, lossing pips, margin, pips, winning pips 

Let me explain one by one what so called pips and margin in Forex market. Two of them are widely used in the Forex market and I think is very important to know what is all about them.

What is pips?

Pip also called Price Interest point where it represent the value that is increasing in the currencies pair. Eg, USD/JPY 108.43 to 108.60, total up 17 pips, if one pip is worth USD10, then you will win USD170. In a simple way, a pip is equal to one point.

What is margin?

Margin is the allocate fund that merchant will hold it for us as and when we open one trade to ensure that we have enough money even though we loss the trade. It depends one a vary range from 1% to 3% depending on the broker requirements.

In other words, broker want to ensure us have enough funds to cover the loss, if the margin is negetive with all the open trade, you will not open any trade until you have enough fund.

Make sure that you all understand with this 2 terms before you even start any trade in Forex Market.

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