Chapter 13: Margin, Pip, Lot and Order Type Flashcards
True or False
The leverage does not depends on the margin.
False
The leverage depends on the margin.
True or False
The lower the margin, the higher the leverage. And the higher the leverage, the higher the profits can be, but also the higher the losses.
True
is one of the great advantages of currency trading and enchants investors with high return opportunities with little equity.
Leverage
an abbreviation for “percentage in point” or “price interest point”
PIP
indicates the price change of a currency pair.
PIP
As a rule, the pip is given to the ________ decimal place, with the exception of the Japanese yen, where it is given to the __________ decimal place.
fourth; second
What are the different order types?
- Market Orders
- Limit Orders
- Stop Orders
are orders that are immediately routed to the market and executed.
Market Orders
are executed at the ask price
Buy orders
are executed immediately at the current bid price.
sell orders
are the means of choice when you want to react quickly, open or close a position.
Market orders
can be of different sizes. Generally, the transaction is not executed until certain conditions are met.
limit order
are set when you want to buy at a certain price, usually below the current market price. If the market price falls, the ____________ is executed immediately.
limit buy order
work in the same way: you hold the order until the price would reach a certain price, then you sell.
Limit sell orders
allow you to quickly take advantage of advantageous price changes, but orders may not be executed at all if the price does not move as specified in the _____________.
Limit orders
like limit orders, are also usually executed with a delay.
Stop orders
is executed when the price is above a certain price.
stop buy order
Similarly, a sell order with a ____________ is executed only when the price falls below a certain mark.
stop sell order
_______________ are often called stop-loss orders because they are good for limiting losses.
Stop orders
To calculate the direct leverage use the following formula Leverage
= 100 / (Margin in percent)
refers to the smallest price change of a price, it is also called a quote jump.
tick
10 ticks make a pip. If the USD/EUR rate rises from 1.5555 to 1.5557 the pip has increased by ___, the tick has increased by __.
2; 20
The size of a position in foreign exchange trading is given in ____
lots
a lot stands for _______ units of the base currency, so a lot of EUR/USD stands for ______ euros.
100,000; 100,000
Other lot sizes are mini lots with _______ units or micro lots with ________ units of currency.
10,000; 1,000
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A RMT, MD, CPA, MBA, Atty, and has 3 certification in belt. (CFMP, CAEA, CATA)
