Deeper outlook of the trading world

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Today, we will dive a little deeper into the world of trading. 


What is a pip?

 A pip is the exchange rate for currency pairs or measurement of change for currency pairs displayed as decimals. One pip is equal to 0.0001. The exception here is the en based pairs, which are quoted with only two decimal places. Nowadays, some brokers are for fractional, pips or pipettes to provide some extra precision, and they are a display as a fifth decimal place, so how to calculate your pip value. The value change in the quote currency, divided by the exchange rate ratio times the amount of units traded, is enormous value. Let'S take a look at this example: the exchange rate for euro us dollars is 1.3. You have to divide the value change in quote currency 0.0001 by the exchange rate; 1.3, and you have to multiply the unit of amounts trading if it's a mini lot, which has 10 000 units, the value will be 0.76 to convert this to your account currency. All you have to do is multiply this with your currency's exchange rate. 

So if you're living in the US, you have to multiply 0.76 by 1.3, which will be equal to 0.98 USD dollars, so how to place a trade in forex in forex. You exchange one currency for another with the hope that the currency you bought will gain value against the currency you sold in every single forex transaction. There are always two currencies involved. This is because you simultaneously buy one currency and sell another one. The first listed currency is called the base currency. The second list listed currency is called uh the coded currency, the exchange rate, which tells you how much you had to pay in the code units.


REJUVENATE YOUR KNOWLEDGE WITH OUR TRADING TERM DICTIONARY. 

Ask price - The price at which your broker plans to sell the base currency for the quote currency.

An order - Instruction from trader to broker

Market order - An order to buy or sell immediately at the best available price.

Limit order - An order to buy or sell at a specific price.

Stop-loss order -  An order to buy or sell once the price reaches a specified price.


Let's dig in deep into the functions and workings of these terminologies.


Types of orders 

A market order, a limit order and a stop-loss order. A market order is an order to buy or sell immediately at the best available price. This type of order guarantees that the order will be executed immediately. Remember that in the first moving market, the price paid or received may be quite different from the last price. Quoted before the order was entered, this is in high volatility markets. A limit order is an order to buy or sell at a specific price. Buy limit is in order to buy at the limit price. This price will always be below the current market price. Let'S take a look at an example: a trader wants to buy euros to use dollars, but he is only ready to buy if he can do it more cheaply, so he will place a buy limit order at a lower price, and the order will be executed once The market price comes to his buy limit price. A sale limit is an order to sell at the limit price. The price will always be above the current market price. The trader wants to sell, but only if he can sell at a price higher than the market price. A stop-loss order is an order to buy or sell once the price reaches a specified price. It is designed to prevent additional losses if the price is going against you. It is the most important order of all consider that you have purchased euros to us dollars at 1.3 same example, and you realize that you made a wrong move, which is a very common case when the price starts to fall. You place your stop-loss order at 1.298, and when the price touches this value, your broker will close the position automatically, which contains your stop. Lower your loss to 20 pips. If you had not set your stop loss, the price could have been continued falling and, depending on your risk appetite, you could have lost all of your money, which is not good and not recommended, so always use your stop-loss orders.


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