Key Trading Terms Flashcards by Kieran Ashburn

Q

What is a pip ?

A

Tiny step in currency movement

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Q

What does pip stand for ?

A

Price interest point

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Q

What do we call the 5th decimal place ?

A

Pipette

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Q

Why do pips matter - 3 things

A

Measure price movements, calculate P&L, determine spreads

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Q

How do we use to calculate value of a pip

A

Use lot sizes

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Q

How large in £ is 1 pip in a standard lot ?

A

£10

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Q

How large in £ is 1 pip in mini lot

A

£1

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Q

How large in £ is 1 pip in micro lot

A

£0.10

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Q

What is a lot size ?

A

How big my trade is

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Q

What is leverage ?

A

Boosting my trade size using borrowed money

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Q

What does leverage determine?

A

How much margin I need to open a position

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Q

What is margin ?

A

Upfront deposit to trade with leverage

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Q

What is initial margin ?

A

Minimum amount needed to open a leveraged position

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Q

What is maintenance margin ?

A

Minimum equity that must be maintained

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Q

What happens if I fall below maintenance margin ?

A

Margin call

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