"2. Bid and Ask Price Every currency pair has two prices: Bid price: The price at which you can sell. Ask price: The price at which you can buy. The ask is slightly higher than the bid. This difference helps brokers operate trading services. Understanding this gap is important because it affects the cost of each trade. 3. Spread The spread is the difference between the bid and ask prices. For instance, if EUR/USD has a bid of 1.1000 and an ask of 1.1002,"
"A pip (short for "percentage in point") measures how much a currency pair moves. Most pairs are priced to four decimal places, and one pip is the last digit. Example: If EUR/USD moves from 1.1000 to 1.1005, it has moved 5 pips. Pips help traders calculate profit, loss, and risk. 5. Lot Size A lot refers to the size of your trade."
Currency pairs express one currency’s value relative to another, for example EUR/USD shows the euro versus the US dollar. Every pair posts a bid price (the sell price) and an ask price (the buy price), with the ask slightly higher and the difference helping brokers operate. The spread is the difference between bid and ask and changes with market activity. A pip measures the smallest price movement (usually the fourth decimal) and is used to calculate profit and loss. Lot sizes (standard, mini, micro) determine trade volume and magnify pip impact. Leverage allows control of larger positions with smaller capital.
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