What are Forex Pips, Lots, Margin and Leverage

Knowing and understanding the proper terminology within the forex market is essential in becoming a successful trader. In this article we  define what pips, lots, margin and leverage are.

Pips and Lots

Currency traders quote the value of a currency pair, and trade sizes, in pips and lots. A pip is usually the smallest amount by which the value of a currency pair can change, although these days some brokers offer fractional pip quotes too.An important guideline for the beginning trader is to measure success or loss in an account by pips instead of the actual dollar value. A one pip gain in a $10 account, is equal, in terms of the trader’s skill, to a 1 pip gain in a $1,000 account, although the actual dollar amount is very different.

Margin and Leverage

Another important concept in currency trading is the twin phenomenon of margin and leverage. Since forex prices move very slowly (in terms of the actual change in value), the vast majority of traders leverage their accounts to create meaningful returns in short term trading. In the absence of leverage, it is difficult to generate even a ten percent return in the forex market, which is not the kind of profit that most forex traders have in mind when beginning their careers.When you open a forex account, the broker will request that you deposit a small sum, known as margin, as insurance against the losses that your account may suffer.

Referring Brokers

RB PROGRAM

Grow your forex business with FXCM—one of the world’s leading forex service providers, and one of the most trusted names in the industry.

FXCM's referring broker (RB) program allows firms to receive compensation for directing new clients to FXCM. Whether you are a money manager or run a business supporting self-directed traders, FXCM offers customized solutions through our wide range of products and services to fit your needs.

FXCM Holdings, LLC Facts

HOLDING AND FACTS

FXCM Holdings LLC has over $100 million in capital

More than 150,000 live accounts are traded on FXCM trading platforms

An average of $365 billion in notional volume is traded each month on FXCM trading platforms

More than $600 million in customer funds trading on platforms offered by FXCM

About FXCM

FXCM Recognized With Best Retail Platform by FX-Week

FXCM triumphed over other industry leading firms, including Saxo Bank and Gain Capital.

"This award confirms FXCM's leadership in the forex market. The No Dealing Desk* (agency execution) business model embraced by FXCM in 2006 is clearly the direction forward for the retail industry. Clients want transparent and fair execution and FXCM offers it," says Marc Prosser, the firm's chief marketing officer.

FXCM developed its proprietary trading platforms: FX Trading station II (PC-based) and FXCM Active Trader (web-based) to meet the rigorous conditions of today's volatile markets. The current platforms were developed by an in-house team of over 50 programmers. FXCM's platforms are extremely stable, scalable and robust. There are over 150,000 live accounts trading on FXCM platforms, with an average of over 8 million trades per month.

Why Trade at FXCM

An average of over $365 billion in notional volume is traded each month on trading platforms offered by FXCM. As a result, we have obtained close banking relationships with eight of the world's largest and most aggressive price providers. Having multiple price providers is especially important in volatile markets, when one or two banks may post wide spreads, or simply avoid quoting any price at all. With so many major banks quoting prices to FXCM, there are competitive spreads, even during market-moving news events.

FXCM does not take a market position—eliminating a major conflict of interest. A dealing desk broker, which acts as a market maker, may be trading against your position. With our No Dealing Desk execution, however, we fill your orders from the best prices available to us from the banks.

Investment Myths

The foreign exchange market is one of the most popular markets for speculation, due to its enormous size, liquidity and tendency for currencies to move in strong trends. Presumably, these characteristics would enable traders to have tremendous success. However, success has been limited mainly for the reasons described below. 

Many traders come with false expectations of the profit potential and lack the discipline required for trading. Short-term trading is not an amateur's game and is usually not the path for quick riches.

If an account value is $10,000 and the trader places a trade for 1 lot, he is in effect, leveraging himself 10 to 1, which is a very significant level of leverage. Most professional money managers are not allowed to leverage even this high. 

Investment plans with 10% and more MONTHLY profits

Everyone can benefit from the great interests made in the Forex market, investment plans with interests starting from 10% MONTHLY are todays reality!
Everyone around the globe can invest, the new financial market offers great opportunities, and nowadays it is accessible to everyone who wants to be part of it.
The end of the monopoly of the banking entities in the Forex Market allowed that it is possible to invest directly in this impressive market. The Foreign Exchange or Forex Market is now more accessible to the public.
Due to the large sums of capital required to participate in the Forex market, it was difficult for individual investors to enter. As a result, primarily large financial institutions, banks and other large investors have been able to invest in this lucrative market.